SIS^ *° ''^ Hawthorne Street Director, SuperfUnd Division ... · 75 Hawthorne Street San Francisco, CA 94105 Re: United States Environmental Protection Agency's Statement of Position

SFUND RECORDS CTR

2 1 7 9 6 6 9

^^<<eDsr,,^ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY I Q \ REGION IX \ S I S ^ *° ''^ Hawthorne Street \ tâ<^^ San Francisco, CA 94105

March 13,2009

Via Email and U.S. Mail

Mr. Keith Takata Director, SuperfUnd Division U.S. Environmental Protection Agency Region 9 75 Hawthorne Street San Francisco, CA 94105

Re: United States Environmental Protection Agency's Statement of Position Regarding Operating Industries, Inc. Superfund Site Thermal Destruction Facility Oversight Costs Dispute

Dear Mr. Takata:

Enclosed please find the above-referenced Statement of Position and exhibits. Please contact me if you have any questions about any of the documents.

Very Truly Yours,

Thomas Butler Assistant Regional Counsel

Enclosures

Janet Magnuson Assistant Regional Counsel

cc: David Giannotti, with Exhibits except, by agreement. Exhibit 1, the Third Partial Consent Decree

Kathleen Salyer, with Exhibits except Exhibit 1, the Third Partial Consent Decree Frederick Schauffler, with Exhibits except Exhibit 1, the Third Partial Consent

Decree Amy Gillespie, with Exhibits except Exhibit 1, the Third Partial Consent Decree Chris Lichens, with Exhibits except Exhibit 1, the Third Partial Consent Decree

I. INTRODUCTION

On March 30, 1992, the United States Environmental Protection Agency ("EPA") and a group of potentially responsible parties ("Work Defendants") at the Operating Industries, Inc., ("OH") Superfund Site ("Site"), entered into an agreement, the Third Partial Consent Decree ("CD-3") by which the Work Defendants agreed to perform studies and work at the Site. CD-3 (without attachments and signature pages) is enclosed as Exhibit 1. Unless otherwise specified, all section and paragraph citations refer to CD-3.

Section XXII governs dispute resolution under CD-3. In a letter dated January 5, 2009, the Work Defendants invoked paragraph XXII.B.2, the formal dispute resolution provisions of CD-3, and on February 19, 2009 submitted to EPA their written statement of position ("Work Defendants' Statement"). Pursuant to paragraph XXII.C.l.b, EPA hereby submits this statement of position ("EPA's Statement") in response to the Work Defendants' Statement.

EPA agrees with the Work Defendants that formal dispute resolution should proceed under paragraph XXII.C. 1. Consistent with paragraph XXII.C. 1 .a, EPA has prepared an administrative record, which will contain all statements of position, as well as the documentation accompanying those statements. Paragraph XXII.C. 1 .c provides that the Director of EPA's Region 9 Superfund Division will issue a final administrative decision, based on the administrative record, resolving the dispute. EPA is preparing the administrative record and will include the Work Defendants' Statement of Position dated February 20, 2009. If there are other documents that the Work Defendants intend to include in the Administrative Record, they should be submitted to EPA prior to the final administrative decision.

II. ISSUE PRESENTED

The sole issue presented by this dispute is whether EPA is entitled under CD-3 to recover from the Work Defendants its Future Oversight Costs for the Thermal Destruction Facility ("TDF") item of CD-3 Excluded Work, which the Work Defendants have and are performing.

III. BACKGROUND

Oil is a 190-acre facility located in Monterey Park, Califomia. The Site was operated firom 1948 through 1984, and over the course of its operation, accepted industrial solid, liquid and hazardous wastes and municipal trash. There have been releases of hazardous substances fi-om the Site and the Site poses numerous threats to human health and the environment. The United States has entered into a number of Consent Decrees and Administrative Orders on Consent with hundreds of PRPs related to the OII Site.

As noted above, in 1992 the United States entered into CD-3 with a number of these PRPs. Some of the CD-3 PRPs agreed to pay cash, while others, the Work Defendants, agreed to implement the work required by the consent decree ("Work"). Before being

able to agree on the final terms of CD-3, however, EPA and the Work Defendants negotiated in detail the scope of the Work Defendants' responsibilities. The final version of CD-3 contains three sets of provisions which resulted from these negotiations, and are now of particular relevance to this dispute.

The first relates to payment of Future Oversight Costs, which paragraph V.S defines as "all costs incurred by the EPA . . . in oversight of the Work and Excluded Work." Paragraph XVII.C.l requires the Work Defendants to pay the first $16 million of certain Future Oversight Costs, and all such costs over $21 million, thus relieving the Work Defendants of responsibility for paying as much as $5 million of Future Oversight Costs.

The second, Section VIII, identifies three discrete but integral elements of the Site's response action which, unlike the rest of the CD-3 Work, the Work Defendants would not necessarily be required to perform. These three items, defined as "Excluded Work" in Section VIII, are:

• The procurement and construction of the Cover Protection Component of the Cover System for the North Slope of the South Parcel ("NSSP");

• The predesign, design, and construction of the TDF and its operation and maintenance for a period of time; and

• The predesign, design, construction, compliance testing, and operation, maintenance, and monitoring of the North Parcel Gas Control, Cover, and Surface Water Management Systems ("North Parcel").

CD-3 leaves open the possibility for EPA to require non-settling parties to perform these items of Excluded Work.

And the third, paragraph VIII.C, permits EPA to require the Work Defendants to perform each of these items of Excluded Work. If EPA exercised this right, paragraph VIII.E entitles the Work Defendants to payment from the CD-3 Cash Escrow Account for an amount up to $6 million per item of Excluded Work.

Eventually, EPA did exercise its right under paragraph VIII.D to require the Work Defendants to perform each item of Excluded Work, including the TDF. EPA required the Work Defendants to perform the TDF item of Excluded Work by letter dated June 6, 1995. See, Exhibit 2, June 6, 1995 EPA Letter Requesting TDF Implementation. The Work Defendants have been performing the TDF Excluded Work and EPA, through the CD-3 Cash Escrow Account, reimbursed the Work Defendants in the amount of $6 million for the Work Defendants' costs associated with the TDF Excluded Work.

EPA first sent the Work Defendants a bill for its oversight of the NSSP and TDF items of Excluded Work in a letter dated September 27,2007. See, Exhibit 3, September 27, 2007 Schauffler Billing Letter. The bill included a cost summary that covered the time period from December 1, 2005 through June 30, 2007.' The amount billed at that

' EPA has not billed the Work Defendants for TDF oversight costs incurred prior to December 1, 2005, but reserves its rights to bill the Work Defendants for those costs.

time for the TDF oversight costs was $206,540.73. hi a letter dated November 14, 2007, the former President of the Work Defendants' sole-purpose remediation contractor at the Site, New Cure, Inc. ("NCI"), indicated that the Work Defendants refused to pay that portion of EPA's oversight costs related to the TDF. See, Exhibit 4, November 14, 2007 Esper Letter.

On September 30, 2008, EPA sent the Work Defendants another oversight bill that included a cost summary for TDF oversight costs and covered the time period from July 1, 2007, to June 30, 2008. See, Exhibit 5, September, 30, 2008 Schauffler Billing Letter. The amount billed for the TDF oversight costs for this time period was $110,067.52. The September 30, 2008, letter also stated that the Work Defendants had failed to pay $201,231.99 in past TDF oversight costs and these costs were outstanding. In a letter dated November 5, 2008, Ms. Esper indicated that the Work Defendants again refused to pay that portion of EPA's oversight costs related to the TDF. See, Exhibit 6, November 5, 2008 Esper Letter.

On December 5, 2008, EPA sent another letter to the Work Defendants which outlined its position on why the Work Defendants are required to pay EPA's oversight costs for the TDF Excluded Work. See, Exhibit 7, December, 5, 2008 Schauffler Demand Letter. This letter contained a formal demand in the amount of $311,299.51 plus interest for the TDF oversight costs and required payment within 30 days of receipt of the letter. At the request of the Work Defendants, EPA agreed to extend the payment due date until January 12, 2009, due to holiday schedules. On January 9, 2009, the Work Defendants informed EPA that they were invoking the CD-3 dispute resolution process, and told EPA that they set aside in an interest bearing account the disputed amount of oversight costs.

EPA has made several efforts to resolve the current dispute informally, and within the procedures established by CD-3. Communications between the parties included various telephone calls between the Work Defendants' and EPA's counsel. These include but are not limited to:

• A conference call on January 9, 2009, between Work Defendants' counsel David Giannotti and Shelby Moore, and EPA's Janet Magnuson, Thomas Butler, and Chris Lichens;

• A conference call on January 28, 2009, involving the same individuals; and • A conference call on January 30, 2009, also with the same individuals except Ms.

Magnuson.

Pursuant to paragraph XXlI.B.l, the informal dispute period ended on February 1, 2009. Paragraph XXII.B.2 then would have required the Work Defendants to "invoke the formal dispute resolution provisions of [CD-3] by submitting to EPA a written statement of position" by February 10, 2009.^ However, EPA agreed to extend this time period for 10 days, to February 20, 2009, pursuant to a request by Mr. Giannotti. EPA received the

^ Pursuant to CD-3, in the event that the parties cannot resolve the dispute by informal negotiations, then the position advanced by EPA is considered binding unless Work Defendants invoke the dispute resolution provisions within 10 days after the conclusion of the informal dispute resolution provisions.

Work Defendants' Statement on February 20, 2009. EPA had 21 days to respond to Work Defendants' Statement, and is hereby filing EPA's Statement within this time fi-ame.

IV. EPA'S POSITION

EPA believes that CD-3's provisions are unambiguous and extremely clear, and have a logical, cohesive structure. The United States Court of Appeals for the Ninth Circuit ("Ninth Circuif') has explained that "consent decrees are essentially contractual agreements that are given the status of a judicial decree. Contract principles are generally applicable in our analysis of consent decrees, provided contract analysis does not undermine the judicial character of the decree. Hook v. Arizona, Dep't of Corrections, 972 F.2d 1012, 1014 (9th Cir. 1992). The Ninth Circuit has ftirther explained that a "written contract must be read as a whole and every part interpreted with reference to the whole, with preference given to reasonable interpretations." Klamath Water Users Protective Ass'n v. Patterson. 204 F.3d 1206, 1210 (9th Cir.).

Here, when read as a whole, five simple paragraphs of CD-3 plainly require the Work Defendants to reimburse EPA for its TDF oversight costs. EPA explained its position to the Work Defendants in a straightforward marmer in the December 5, 2008 Demand Letter to the Work Defendants, repeated it during the informal dispute resolution process, and presents it again here.

A. Paragraph VIII. A.2 defines the TDF item of Excluded Work as the "predesign, design, and construction of the TDF; and operation, maintenance and monitoring of the TDF [for a period of time];"

B. Paragraph VIII.C provides that if the "Excluded Work is not performed by any other person. Work Defendants shall perform any or all item(s) of Excluded Work or any portion thereof, upon written request by EPA;"

C. Paragraph VIII.D requires that "if Work Defendants perform an item(s) or portion of Excluded Work, all references in this Decree to Work shall be read to apply to that item(s) or portion of Excluded Work...." (emphasis added);

D. Paragraph XVII.C. 1, governing payment of the United States' Future Oversight Costs, mandates that "Work Defendants shall reimburse EPA.. .for the oversight costs incurred by the United States under this Decree/or Work...." (emphasis added); and finally

E. Paragraph V.S defines "Future Oversight Costs" as "all costs incurred by the EPA and other agencies and departments of the United States, by the State, and by contractors for either of them in oversight of the Work and Excluded Work."

Read together, paragraph VIII.C allows EPA to require the Work Defendants to perform any or all items of the CD-3 Excluded Work. Paragraph VIII.D commands that if the Work Defendants perform any item of Excluded Work, all references in CD-3 to Work shall be read to apply to that item of Excluded Work. And Paragraph XVII.C. 1 makes an explicit reference to Work when it requires the Work Defendants to reimburse EPA for the costs it incurs overseeing Work. Just in case those provisions were not clear enough, EPA and the Work Defendants agreed in CD-3 to define the term Future Oversight Costs to include the costs of overseeing the Work and Excluded Work.

Therefore, when in 1995 EPA sent the letter to the Work Defendants requiring them to perform the TDF item of CD-3 Excluded Work, and reminding them that the "TDF item of Excluded Work shall be considered Work under CD-3," and the Work Defendants did perform the TDF item of Excluded Work, the Work Defendants became responsible for paying the Future Oversight Costs related to the TDF. See, Exhibit 2, June 6, 1995 EPA Letter Requesting TDF Implementation at p.l. In 2007 and 2008, EPA billed the Work Defendants for a portion of those Future Oversight Costs, and the Work Defendants refused to pay them. The Work Defendants are in violation of their obligations under the plain, unambiguous terms of CD-3.

V. EPA'S RESPONSES TO THE WORK DEFENDANTS' POSITION

The Work Defendants' Statement raises three types of arguments to advance the position that the Work Defendants are not responsible for paying EPA's TDF oversight costs. The three types of arguments can be described as those based on the provisions of the CD itself, those based on extrinsic evidence, and those based on defenses to liability for payment. There is no reason to look to extrinsic or parol evidence to interpret CD-3's terms. Citing to the Supreme Court in United States v. Armour & Co., 402 U.S. 673, 682 (1971), the Ninth Circuit has made clear that "[t]he scope of a consent decree must be discerned within its four comers, and not by reference to what might satisfy the purposes of one of the parties to it." United States v. Gila Vallev Irrigation Dist., 31 F.3d 1428, 1433 (9th Cir. 1994). The Ninth Circuit also stated that "[w]hile it is trae that mles of constmction.. .may be appropriate in interpreting a consent decree, we will only apply such mles if the terms of the decree are ambiguous." Id at 1439. Finally, "[t]he fact that the parties disagree as to the Decree's meaning does not in and of itself establish that the contract is ambiguous." United States v. Gila Vallev Irrigation Dist., 961 F.2d 1432, 1441 (9th Cir. 1992) (citing to International Union of Bricklavers v. Martin Jaska, Inc., 752 F.2d 1401, 1406 (9th Cir. 1985)). Because the terms of CD-3 itself are clear, only the first type of argument—those based on the text of CD-3 itself—needs to be addressed. Regardless, in the interest of being comprehensive, we address below each of the Work Defendant positions, all of which fail to disprove the Work Defendants' responsibility for paying the Future Oversight Costs for the TDF.

A. The CD Clearly And Unambiguously Requires Payment Of TDF Oversight Costs By Work Defendants.

The Work Defendants principally rely on four provisions of CD-3 to advance their position that the terms of CD-3 do not require them to pay EPA's Future Oversight Costs for the TDF. The first provision is paragraph VIII.A.l's specific requirement that the Work Defendants pay EPA's NSSP oversight costs. The second provision is paragraph VIII.D's requirement that the Work Defendants achieve Performance Standards for the items of Excluded Work they perform. The third provision, paragraph XVIII.D, authorizes EPA to use the CD-3 Cash Escrow Account monies for oversight costs. And the fourth and final provision, paragraph XVII.C, governs the frequency of EPA's billing. EPA addresses these provisions, below, but none individually or collectively contradict EPA's position that CD-3 requires the Work Defendants to pay EPA's TDF oversight costs once they begin to perform the TDF item of Excluded Work.

1. The Work Defendants' Agreement To Pay The Future Oversight Costs For The North Slope Of The South Parcel Does Not Relieve Them Of Their Responsibility To Pay The Future Oversight Costs For The Other Two Items Of Excluded Work.

Referring to the NSSP item of Excluded Work, paragraph VIII.A.l.d requires that the "Work Defendants shall pay the United States' and the State's costs incurred in oversight of this item." The Work Defendants assert that because CD-3 specifically assigned the NSSP oversight costs to them, that CD-3 could not have assigned the Future Oversight Costs for the TDF and North Parcel to them. This conclusion does not logically follow. CD-3 does require the Work Defendants to pay the TDF and North Parcel oversight costs if they perform those items of Excluded Work.

When EPA agreed to "exclude" the NSSP, TDF, and North Parcel from the Work Defendants' CD-3 Work, EPA was contemplating the possibility of requiring non-settling parties to perform these items of Excluded Work. Therefore, in selecting the Excluded Work activities, EPA and the Work Defendants carefully assured that each item was sufficiently distinct from the Work Defendants' CD-3 Work that coordination would not be unduly burdensome. As discussed more fully below, however, EPA's oversight of the NSSP simply could not be readily distinguished from its oversight of the CD-3 Work.

The NSSP is defined in paragraph VIII.A.l .b as the "procurement and constmction of the Cover Protection Component of the Cover System for the [North Slope of the South Parcel]." The Cover Protection Component is but one layer on one facet of the entire, multi-layered, integrated South Parcel landfill cap, known as the Cover System. Under CD-3, the Work Defendants agreed to be responsible for the entire landfill Cover System (minus the Cover Protection Component), and to pay EPA's oversight costs related to that CD-3 Work. Since the Work Defendants were going to constmct the rest of the Cover System, and the procurement and constmction of the Cover Protection Component was so closely integrated with the constmction of the rest of the Cover System, EPA believed it would not be able to adequately segregate its

oversight costs between the two. Therefore, as EPA reminded the Work Defendants in its letter of December 5, 2008, EPA insisted, and the Work Defendants agreed, to pay the Future Oversight Costs related to the NSSP, regardless of who performed this item of Excluded Work, because "it would be extremely difficult, if not impossible, to track EPA's NSSP oversight costs separately from its CD-3 Work Oversight costs." See, Exhibit 6, Schauffler Demand Letter_at p. 2.

hi contrast to the NSSP, the other two items of CD-3 Excluded Work, the TDF and the North Parcel, were discrete enough activities that both their implementation and oversight costs could be tracked separately. Therefore, CD-3 allowed for recovery of the Future Oversight Costs from the party(ies) that performed those items of Excluded Work.

2. If The Work Defendants Perform An Item Of Excluded Work, They Are Required To Pay EPA's Future Oversight Costs And Achieve Performance Standards.

Paragraph VIII.D states that if Work Defendants perform an item.. .of Excluded Work, all references in this Decree to Work shall be read to apply to that item.. .of Excluded Work, and Work Defendants shall be responsible for attaining Performance Standards pertaining to that item.. .of Excluded Work." (Emphasis added.) As explained above, a cohesive reading of this mandate would require that "all references in this Decree to Work" plainly would include the specific reference to Work in paragraph XVII.C requiring that "Work Defendants shall reimburse EPA.. .for the oversight costs incurred by the United States under this Decree for Work...." (Emphasis added.)

The Work Defendants, however, argue that once they were required to perform an item of Excluded Work, paragraph VIII.D only requires them to achieve that item of Excluded Work's Performance Standards. Such an interpretation fails to explain the presence and meaning of the terms "all" and "and." While EPA agrees that paragraph VIII.D does require the Work Defendants to attain Performance Standards for all the Work and Excluded Work they perform, this requirement is in addition to the requirement in VIII.D that all references in the consent decree to Work shall be read to apply to that item of Excluded Work.

3. EPA Reserved Its Right To Pay Its Excluded Work Oversight Costs From The CD-3 Cash Escrow Account, But Need Not Do So.

While CD-3 allows EPA to recover its TDF and North Parcel Future Oversight Costs from the party or parties who perform(s) those items of Excluded Work, paragraph XVII.C also allows EPA payment from the CD-3 Cash Escrow Account for its "Future Oversight Costs not paid by Work Defendants...." These two potential avenues for EPA to recover its oversight costs, while overlapping, are completely consistent.

In the Work Defendants' Statement, the Work Defendants assert that "CD-3 permits EPA to collect its oversight costs for TDF and [North Parcel] items of Excluded Work from the CD-3 Cash Escrow, not from the Work Defendants." See, Work

Defendants' Statement at p. 6. CD-3 does permit EPA to collect from the CD-3 Cash Escrow Account its oversight costs for the TDF and North Parcel items of CD-3 Excluded Work. However, in no case does paragraph XVIII.D require EPA to access the CD-3 Cash Escrow Account for those purposes. To the contrary, EPA and the Work Defendants deliberately designed the CD-3 Cash Escrow Account's authorized purposes to include payment of the CD-3, TDF and NP oversight costs not paid by the Work Defendants in order to address the two specific circumstances described below.

a. EPA May Use CD-3 Cash Escrow Account Funds To Pay Its Oversight Costs Exceeding $16 Million But Less Than $21 Million.

As noted in the Background section, above, as a concession to the Work Defendants in the negotiation of CD-3 and an inducement for them to settle, EPA agreed in paragraph XVII.C. 1 to assume responsibility for paying up to $5 million of its Future Oversight Costs—those in excess of $16 million, but below $21 million. To assure that this $5 million of Future Oversight Costs could be paid from some source, EPA and the Work Defendants agreed that the authorized purposes for the CD-3 Cash Escrow Account included payment of those Future Oversight Costs not paid by the Work Defendants. As the plain terms of CD-3 reflect, the Work Defendants agreed to this design.

b. EPA Reserved The Right To Use CD-3 Cash Escrow Account Funds To Pay Its TDF And/Or North Parcel Excluded Work Oversight Costs.

Similarly, and also as noted in the Background section, above, EPA agreed to reduce the scope of the Work Defendants' CD-3 Work responsibilities by designating the three items of Excluded Work. While CD-3 allowed for the possibility that EPA would issue Unilateral Administrative Orders ("UAOs") to non-settling parties and require them to perform the Excluded Work, if EPA did not issue UAOs to other parties, EPA would pay the Work Defendants up to $6 million to perform each item of Excluded Work. Because a UAO recipient would not be agreeing in a consent decree to pay oversight costs associated with this Excluded Work, EPA may have needed to recover those oversight costs in litigation. At the time of the CD-3 negotiations, federal law was uncertain regarding whether or how EPA could recover its oversight costs under UAOs. To assure these Future Oversight Costs would be paid regardless of the federal case law, EPA and the Work Defendants agreed to include in the authorized purposes for the CD-3 Cash Escrow Account payment of those Future Oversight Costs not paid by the Work Defendants.

' See, United States v. Rohm and Haas Co.. 2 F.3d 1265 (3d Cir. 1993) (holding the constitutionally-based non-delegation doctrine prohibits EPA from recovering under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et seq., oversight costs in a § 106 action related to a private cleanup). Rohm and Haas was later overruled by United States v. E.L Dupont De Nemours & Co.. 432 F.3d 161, 162-163 (3d Cir. 2005) (holding CERCLA authorizes the United States to recover costs incuned in the course of supervising a hazardous waste cleanup conducted by responsible private parties).

Therefore, the Work Defendants are correct that CD-3's stmcture is designed to allow "EPA to collect its oversight costs for TDF and [North Parcel] items of Excluded Work from the CD-3 Cash Escrow...." Work Defendants' Statement at p. 6. CD-3 purposefully is stmctured that way so that EPA could look to the CD-3 Cash Escrow Account for its oversight costs exceeding $16 million but below $21 million, or in the event a UAO recipient successfully challenged EPA's ability to collect oversight costs under the UAO. However, this additional avenue for reimbursement of its oversight costs does not in any way limit EPA's ability, under the plain provisions of CD-3, to recover its TDF and North Parcel oversight costs from the Work Defendants in the event the Work Defendants performed those items of Excluded Work. The Work Defendants did perform the TDF, and therefore are responsible for the oversight costs associated with that Work.

4. EPA Has Complied With Its Commitment To Bill The Work Defendants For Its Future Oversight Costs "No More Frequently Than Annually."

In the Work Defendants' Statement, they request that EPA "concede that it is required to bill the Work Defendants for oversight costs on a periodic basis, no more frequently than annually." Work Defendants' Statement at p. 8. EPA agrees that paragraph XVII.C guides EPA's Future Oversight Costs bilHng, and asserts that it has not and will not bill the Work Defendants for its Future Oversight Costs more frequently than annually. Therefore, EPA has not violated this provision.

B. Positions Based On Extrinsic Evidence

The terms of CD-3 are neither ambiguous nor unclear, and collectively they render a cohesive, logical plan for assuring the Excluded Work is performed and EPA's Future Oversight Costs associated therewith are paid. To reiterate, "[t]he language of the [consent decree] governs if it is clear and explicit." Gates v. Rowland, 39 F.3d 1439, 1444 (9" Cir. 1994) (citing to the Califomia Civil Code § 1638 on interpreting contracts). Therefore, there is no reason to look to extrinsic or parol evidence to interpret those terms."* Even if one were to consider the extrinsic evidence on which the Work Defendants' argument relies, however, none of the extrinsic evidence presented by the Work Defendants disproves their responsibility for paying the Future Oversight Costs associated with the TDF.

"The basis for the rule that extrinsic evidence is inadmissible to interpret, vary or add to the terms of an unambiguous written instrument is that if parties to an agreement could not rely on written words to express their consent to the express terms of that agreement, those words would become little more than sideshows in a circus of self-serving declarations as to what the parties to the agreement really had in mind. The parole [sic] evidence rule thus enables parties to rely on written instruments as embodying a complete memorial of their agreement, and to avoid costly and disruptive litigation over the existence of oral and implied terms that may or may not have been contemplated by the parties." United States v. Westlands Water Dist.. 134 F. Supp. 2d 1111, 1136 (E.D. Cal. 2001)(quoting from Barcellos & Wolfsen. Inc.. 849 F. Supp. 717, 721 (E.D. Cal 1993)).

1. EPA's Eariy CD-3 Negotiation Letters To Which The Work Defendants Refer Support EPA's Position In This Dispute, Not The Work Defendants': EPA Demanded That The Work Defendants Pay All Of EPA's Oversight Costs.

As page 7, section 4(b)(ii) of the Work Defendants' Statement confirms, EPA's 1990 Special Notice Letter sought constmction of the TDF as part of the CD-3 Work and, by implication, payment of EPA's Future Oversight Costs associated with that work. By January 18, 1991, EPA was willing to consider the thermal destmction facility as Excluded Work, but still was requiring that the Work Defendants "pay all EPA oversight costs during the design and constmction and five years of the O&M." See, Exhibit 8, January 18, 1991 letter from K. Shine to D. Giannotti at p. 2. Therefore, in each of these two letters, EPA was consistent that it expected the Work Defendants to pay all of EPA's Future Oversight Costs.

2. CD-3 Was A Negotiated Document, With Extensive Input From The Work Defendants, And Therefore, Even If It Were Ambiguous, Should Not Be Interpreted Against EPA's Interests.

The negotiation of CD-3 took place over many months, during which the Work Defendants and their representatives actively engaged in drafting its terms and successfully negotiated concessions from EPA. Negotiated consent decrees are not interpreted by default against the government. "The contra proferentem mle states that a Court must constme a contract against the party that drafted it.. .However, the Ninth Circuit does not universally or automatically apply the mle in contracts other than those for insurance. The mle does not apply when equal sfrength parties bargain at arm's length. Finally, the mle only applies where there are two reasonable interpretations of ambiguous contract provisions." Turner v. United States ex rel. United States Dep't of Agric., FMHA, 875 F. Supp. 1430, 1435 (D. Nev. 1995) (intemal citations omitted); see also, Elev v. Boeing Co.. 945 F.2d 276, 280 (9th Cir. 1991) (stating that contra proferentum "is not automatically or universally applied to other confracts, especially those that result from arms-length bargaining by parties of equal power").

While the first draft of the consent decree may have been prepared by the United States, as is common practice, CD-3 itself was a heavily negotiated document, into which the United States and the Work Defendants voluntarily entered in good faith. Both the United States and Work Defendants made compromises in the negotiation process. Among those compromises that the United States made were its agreement to assume responsibility for its Future Oversight Costs over $16 million but under $21 million (pursuant to paragraph XVII.C. 1), to exclude certain work from the Work Defendants' CD-3 Work responsibilities (pursuant to Section VIII), and to pay the Work Defendants up to $6 million for each item of Excluded Work if Work Defendants performed that item of Excluded Work (pursuant to paragraph VIII.E). These concessions by the United States, among others, demonstrate that the Work Defendants had ample input into crafting the terms of CD-3. The Work Defendants' Statement itself, in section 4(b)(ii) at page 7, recounts the Work Defendants' own version of their success in negotiating

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concessions from EPA in the process of drafting CD-3. Indeed, the Work Defendants even admit to having specifically negotiated for the language that eventually does appear in the final version of paragraph XVII.C.1 regarding payment of the United States' Future Response Costs. See, Exhibit 9, Email from Mr. Giannotti to Mr. Butler and Ms. Magnuson transmitting April 17, 1991 Draft of CD-3, and Referenced Attachment. It is this provision which ultimately controls the payment at issue in this dispute. Therefore, the clear language which remains in CD-3, and which the Work Defendants helped draft, is the result of a negotiated agreement, was accepted mutually, and cannot be interpreted against the United States simply because the Work Defendants are now displeased with terms to which they previously agreed.

3. The Letters By Which EPA Requested The Work Defendants To Perform The TDF And North Parcel Of Excluded Work Items Are Consistent With EPA's Position: EPA Pointed Out That Those Items Of Excluded Work Became Work.

In June 1995 and April 2004, EPA sent letters to the Work Defendants by which EPA exercised its right to request, pursuant to paragraph VIII.C, that the Work Defendants perform the TDF and North Parcel items of Excluded Work, respectively. In each of these letters, the language of EPA's requests echoed that of CD-3 itself, and was consistent with the position EPA has taken throughout this dispute. In each letter, EPA made clear that the Excluded Work item whose performance EPA was then requiring of the Work Defendants "shall be considered Work under CD-3...." See, June 6, 1995 EPA Letter Requesting TDF Implementation, Exhibit 2, at p. 1; April 27, 2004 EPA Letter Requesting North Parcel Implementation, Exhibit 10, at p. 2. While EPA also used these letters to remind the Work Defendants in each instance that the "CD-3 Work Defendants shall be responsible for attaining the Performance Standards pertaining to" the item of Excluded Work in question, such reminders have no bearing on the fact that when these items of Excluded Work became Work, Section XVII.C of CD-3 required the Work Defendants to pay EPA's oversight costs for such Work.

4. The Letter Agreement Is Not Germane To This Dispute, And Does Not Undermine EPA's Position.

In 2006, EPA entered into a Letter Agreement Regarding Certain Payments to the Work Defendants Pursuant to the Eighth Partial Consent Decree ("Letter Agreement"). See, Exhibit 11, Letter Agreement. The main purpose of this Letter Agreement was to allocate the proceeds of the future sale of the North Parcel. In paragraph II.B.l.c. of the Letter Agreement, EPA reserved its right to collect from the proceeds of the future sale of the North Parcel the "[o]versight costs incurred by EPA for the North Parcel Excluded Work [of CD-3]." The fact that EPA reserved in the Letter Agreement its rights to collect from the proceeds of the sale of the North Parcel its oversight costs associated with the North Parcel item of CD-3 Excluded Work does not mean that EPA had no independent right to collect those costs. By building this provision into the Letter Agreement, EPA merely provided another avenue by which it could collect these costs, as opposed to billing periodically. Other than stating their belief that the Letter

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Agreement's provision allowing for EPA's recovery of its North Parcel oversight costs is duplicative, the Work Defendants have failed to provide any rationale for why EPA's ability to recover its costs through the Letter Agreement negates its ability to recover the same costs through a judicially entered consent decree.

5. Oil's Eighth Partial Consent Decree Addresses The Excluded Work Oversight Costs In The Same Fashion As CD-3.

The Work Defendants essentially argue that EPA drafted Oil's Eighth Partial Consent Decree ("CD-8") in a better way than CD-3 regarding the payment of oversight costs. This is both untme and irrelevant. Each CD was a separately negotiated document, concerning a different subject matter, to which a different group of parties agreed at a wholly different time. CD-3's treatment of oversight costs is independent of any other consent decree's treatment of such costs, especially one, like CD-8, negotiated ten years after CD-3.

Regardless, CD-8 treats Excluded Work oversight costs in the same fashion as CD-3: whichever party performs the Excluded Work is responsible for EPA's oversight costs associated with that item of Excluded Work. Under CD-8, if a non-settling party had performed the CD-8 Excluded Work, EPA could have sought to recover its Excluded Work oversight costs from that party. If the Work Defendants perform the CD-8 Excluded Work, as they are doing, EPA looks to them to pay the Excluded Work oversight costs.^ This is exactly how CD-3 is stmctured.

C. Defenses

The plain terms of CD-3 do not support the result the Work Defendants seek. Their arguments based on extrinsic evidence need not be considered and, regardless, are unhelpful to their position. The Work Defendants' last lines of reasoning are based on equally unsupportable alternative propositions.

1. EPA's Billing Statements And Conduct Do Not Relieve The Work Defendants Of Their Obligations Under CD-3.

The Work Defendants assert that the language in EPA's billing letters and the timing of EPA's bills for the TDF and North Parcel oversight costs somehow either relieve the Work Defendants of their obligations to pay such bills, or otherwise modify EPA's rights under CD-3. Neither proposition is tme, and each confradicts Ninth Circuit precedent holding that where a consent decree's language "itself is clear and unambiguous.. .there is no need to examine the implementation of the Decree to

^ Under CD-8, the Work Defendants pre-ftinded monies into a Special Account. If the Work Defendants performed the CD-8 Excluded Work, EPA could withdraw certain of its Excluded Work oversight costs from the Special Account; EPA was to bill the Work Defendants directly for additional Excluded Work oversight costs. See, Exhibit 12, Excerpts from Eighth Partial Consent Decree, paragraph XVIII.E, paragraph XVin.G.3, and Section XX.

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determine how to define [it]...." United States v. Gila Vallev Irrigation Dist., 31 F.3d 1428, 1439 (9th Cir. 1994).

EPA is entitled to reimbursement of its oversight costs related to the TDF and North Parcel items of CD-3 Excluded Work from the party performing those items of CD-3 Excluded Work, regardless of any statements EPA included in a billing letter. The Work Defendants, however, point to a statement in EPA's September 27, 2007 billing letter to assert that EPA has been inconsistent in interpreting the Work Defendants' responsibility to pay Excluded Work oversight costs for the Excluded Work they perform under CD-3. Specifically, the Work Defendants point out that in EPA's September 27, 2007 billing letter—the first time EPA had billed the Work Defendants for its TDF oversight costs—EPA made reference to paragraph XVII.E of CD-3. While EPA's reference in fact was inapposite, and EPA has admitted as much repeatedly, the reference has no importance to this dispute nor to the Work Defendants' obligations under CD-3.

Paragraph VIII.E entitles the Work Defendants to reimbursement from the CD-3 Cash Escrow Account of up to $6 million in Excluded Work costs for each item of Excluded Work they perform. Paragraph XVII.E.2, to which EPA improperly referred in the September 27, 2007 billing letter, requires the Work Defendants to pay all costs over $6 million for each item of Excluded Work they perform. While it is tme that the Work Defendants are responsible for all costs over $6 million for each item of CD-3 Excluded Work which they perform, and while it is also tine that the Work Defendants are responsible for paying EPA's oversight costs for each item of CD-3 Excluded Work which they perform (whether or not they have spent $6 million on that item of CD-3 Excluded Work), the latter responsibility is not dependent on the former. EPA's reference to paragraph XVII.E.2 in its September 27, 2007 letter was confusing, but it in no way changed the Work Defendants' obligations under the CD-3. Moreover, in its September 30, 2008 billing letter and December 5, 2008 demand letter, EPA properly and consistentiy referenced paragraphs VIII.D and XVII.C. 1, the provisions which do entitle EPA to payment of its oversight costs related to the TDF and North Parcel items of CD-3 Excluded Work.

The Work Defendants also point to the fact that EPA first billed the Work Defendants for its TDF oversight costs in 2007. EPA does not deny that it delayed billing the Work Defendants for its TDF (and North Parcel) oversight costs. However, EPA stresses that its only billing obligation under paragraph XVII.C. 1, as noted above, is to bill for its oversight costs "on a periodic basis, no more frequently than annually." Any delay in billing does not diminish EPA's right under CD-3 to bill the Work Defendants for those costs. The consent decree provides no deadline for billing.

The only published federal case to address the subject of delayed billings under CERCLA consent decrees clearly supports EPA's position. In United States v. Witco Corp.. 76 F. Supp. 2d 519, 525 (D. Del. 1999), the District Court refiised to countenance the defendants' claim that EPA's five year delay in billing its oversight costs constituted a material breach of EPA's obligations under the consent decree, even when the decree in question mandated that EPA "shall send [defendant] a demand for payment of such costs

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on an annual basis, with each demand to be made as soon as practicable after the anniversary date of the entry of this Consent Decree." Id. at 522 (emphasis added). In so doing, the court pointed out that not only was the delay in billing not a material breach, but that the defendants suffered no harm from the delay and actually "benefited from EPA's tardiness by retaining the money over the five-year period." Witco, 76 F. Supp. at 525.

To the extent the Work Defendants' argument is really that EPA has not billed the Work Defendantsê^wewr/y enough, their claim would be characterized as an equitable laches claim. Such claims will not be entertained against the government in these circumstances. "[I]t is well established that the sovereign is immune from equitable doctrines when it asserts public rights. Where the defenses of unclean hands or laches have been used against the government when it is asserting public rights, courts have repeatedly held that equitable principles will not be applied to thwart public policy or the purpose of federal laws. Therefore, in cases where laches or unclean hands have been asserted in CERCLA actions, many courts have held that such doctrines are not appropriate in CERCLA claims." Kellev v. Thomas Solvent Co., 714 F.Supp 1439, 1451-52 (W.D. Mich 1989) (intemal citations omitted); accord. United States v. Westem Processing Co., 734 F. Supp. 930 (W.D. Wash. 1990) (holding that equitable defenses are unavailable in CERCLA actions where the government is acting in its sovereign capacity to assert public rights); and Califomia ex rel. State Lands Com, v. United States, 512 F. Supp. 36, 40 (N.D. Cal. 1981) (stating "equitable defenses of the statute of limitations, laches and estoppel cannot be asserted against a sovereign," and citing many United States Supreme Court cases as precedent).

2. Obligations Under Consent Decrees Are Not Subject To Statutes Of Limitation.

The Work Defendants also assert that EPA's right to be reimbursed is somehow abbreviated by the Califomia statute of limitations for bringing a claim of breach of contract. The Califomia statute of limitations for breach of contract does not apply to this dispute. EPA is not alleging that the Work Defendants have breached a contract or their obligations under CD-3; rather, EPA is seeking reimbursement, pursuant to CD-3, for oversight costs that the Work Defendants agreed to pay and have been ordered to pay by the District Court. The consent decree imposes no deadline on EPA's right to be reimbursed for its oversight costs. Under CD-3, EPA is entitled to reimbursement for its oversight costs as long as it continues to incur such costs.

Moreover, even if alleging California's four year statute of limitation did apply to this dispute, it would apply when Work Defendants first refused to pay EPA's oversight costs. Thus, since the Work Defendants first refused to pay EPA's TDF oversight costs on November 14, 2007, the earliest any four year Califomia breach of contract statute of limitation could mn would be four years from that date, or roughly the fall of 2011.

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VI. CONCLUSION

This is a very narrow, simple dispute over interpretation of a consent decree. The terms of the consent decree are clear, unambiguous, and without contioversy. No extrinsic evidence or defenses need be reviewed or considered to understand the plain purpose and intent of the provisions in question, and the requirements created by them. However, even when one does consider the extrinsic evidence and defenses raised by the Work Defendants, they are unhelpful to the Work Defendants' position and unpersuasive. Once EPA required the Work Defendants to perform the Thermal Destmction Facility item of CD-3 Excluded Work, all references in CD-3 to Work apply to the TDF item of CD-3 Excluded Work, including the requirement in paragraph XVII.C that the Work Defendants pay EPA's oversight costs for all Work. Thus, the Work Defendants assumed the responsibility of pajnng EPA's Future Oversight Costs related to each item of Excluded Work they performed, including the TDF.

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LIST OF EXHIBITS

Exhibit 1: March 30, 1992, Third Partial Consent Decree C'CD-3").

Exhibit 2: June 6, 1995 EPA Letter Requesting TDF Implementation.

Exhibit 3: September 27, 2007 Schauffler Billing Letter.

Exhibit 4: November 14, 2007 Esper Letter.

Exhibit 5: September 30, 2008 Schauffler Billing Letter.

Exhibit 6: November 5,2008 Esper Letter.

Exhibit 7: December 5, 2008 Schauffler Demand Letter.

Exhibit 8: January 18, 1991 Letter from K. Shine to D. Giannotti.

Exhibit 9: Email from Mr. Giannotti to Mr. Butler and Ms. Magnuson Transmitting April 17, 1991 Draft of CD-3, and Referenced Attachment.

Exhibit 10: April 27, 2004 EPA Letter Requesting North Parcel Implementation.

Exhibit 11: Letter Agreement.

Exhibit 12: Excerpts from Eighth Partial Consent Decree, paragraph XVIII.E., paragraph XVIII.G.3., and Section XX.

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BARRV HARTMAH Acting Assistant Attorney General Envlronnent and Natural Resources Division ROBERT D. BROOK Environmental Enforceoent Sectio) U.S. Departnent of Justice P.O. Box 7611, Ben Franklin Sta Nashington, B.C. 20044

Telephone: (202) 514-2738

LOURDES G. BAIRO "Pir-United States Attorney iV;' --' -, LEOH K. WEIDKAH '—• Chief, Civil Division SCOTT PARK Assistant United States Attorney 300 Horth Los Angeles Street Los Angeles, California 90012

Telephone: (213) 694-2285

NANCY J. MARVEL KATHERINE L. SHINE U.S. Environmental Protection Agency, Region IX 75 Hawthorne Street San Francisco, Califomia 94105

Telephone: (415) 744-1340

Attorneys for Plaintiff, the United states

DANIEL E. LUNGREH Attorney General of the State of California THEODORA BERGER Assistant Attorney General DENNIS A. RAGEN Deputy Attorney General 110 west A street. Suite 700 San Diego, California 92101

Telephone: (619) 238-3496

Attorneys for Plaintiff, State of Califomia

UMITED STATES DISTRICT COURT CBMTRXL DISTRICT 0? CALITORMIA

UNITED STATES OF AMERICA, THE STATE OF CALIFORNIA, and THE CALIFORNIA HAZARDOUS SUBSTANCE ACCOUNT,

Plaintiffs,

CIVIL ACTION NO 9! 652:

THIRD PARTIAL CONSENT DECREE

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CHEVRON CHEMICAL COMPANY ; CHEVRON PIPE LINE CO.; CHEVRON USA, INC.; TEXACO INC.; ATLANTIC RICHFIELD COMPANY; AMERICAN NATIONAL CAN; EXXON CORPORATION; MCDONNELL DOUGLAS CORPORATION; UNION OIL COMPANY OF CALIFORNIA; NORRIS INDUSTRIES, INC., NI INDUSTRIES, INC., a MASCO INDUSTRIES subsidiary; SHELL OIL COMPANY; ORYX ENERGY COMPANY; OCCIDENTAL PETROLEUM CORPORATION; MOBIL OIL CORPORATION; SOUTHERN CALIFORNIA GAS COMPANY; CROWN BEVERAGE PACKAGING, INC. (formerly named Continental Beverage Packaging, Inc. and successor to Continental can Conpany, Inc.); SANTE FE ENERGY COMPANY/C.W.O.D.; MARTIN MARIETTA CORPORATION on behalf of COMMONWEALTH ALUMINUM CORPORATION (formerly known as MARTIN MARIETTA ALUMINUM, INC.); UNION PACIFIC RESOURCES COMPANY; CONOCO INC.; DOUGLAS OIL CO.; SOULZ-ARNON LIQUIDATING AGENCY; GENERAL MOTORS CORPORATION; LOCKHEED CORPORATION, and LOCKHEED AERONAUTICAL SYSTEMS COMPANY DIVISION; LONG BEACH OIL DEVELOPMENT COMPANY; BETHLEHEM STEEL CORPORATION; ALUMINUM COMPANY OF AMERICA; SOUTHERN CALIFORNIA RAPID TRANSIT DISTRICT; ALLIED SIGNAL, INC. for GARRETT AIRESEARCH and BENDIX; XEYSOR CENTURY CORPORATION; THE STROH BREWERY CCmPANY; UNIROYAL, INC. by the UNIROYAL GOODRICH TIRE COMPANY as successor in Interest; AMERICAN AIRLINES, INC.; BETZ LABORATORIES, INC.; DEPARTMENT OF WATER AND POWER Of the CITY of LOS ANGELES; HENKEL CORPORATION for itself and for EMERY CHEMICALS DIVISION; KERN FOODS, INC. SHAREHOLDERS' LIQUIDATING TRUST; SOUTHERN CALIFORNIA EDISON COMPANY; MITCHELL

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ENERGY CORPORATION; REYNOLDS METALS COMPANY; CALGON CORPORATION; PPG INDUSTRIES, INC.; BORG-WARNER CORPORATION for itself and for BYRON JACKSON PUMP DIVISION; PARKER-HANNIFIN CORPORATION; E.B. King for SOUTHERN CALIFORNIA CHEMICAL COMPANY; LIBERTY VEGETABLE OIL COMPANY; UNITED STATES BRASS CORPORATION, d/b/a EASTMAN CENTRAL: INGERSOLL-RAND COMPANY for itself and for PROTO TOOL COMPANY, INC.: LONG BEACH UNIT, MIUIINGTON OIL FIELD, CALIFORNIA (CITY OF LONG BEACH, UNIT OPERATOR: THUMS LONG BEACH COMPANY, AGENT FOR FIELD CONTRACTOR); GROW GROUP INC. on behalf of AMERITONE PAINT CORPORATION and TREWAX DIVISION; XEROX CORPORATION; MENASCO AEROSYSTEHS DIVISION CALIFORNIA OPERATION DIVISION OF COLTEC INDUSTRIES INC.; TRW INC.! REICHHOLD CHEMICALS, INC.! HOLLYTEX CARPET MILLS/USG CORPORATION; CROWLEY MARITIME CORPORATION on behalf Of its wholly owned subsidiaries CROWLEY TOWING S TRANSPORTATION CO. and CROWLEY ENVIRONMENTAL SERVICES CORPORATION; CONTAINER CORPORATION OF AMERICA; SOUTHERN PACIFIC TRANSPORTATION COMPANY; NL INDUSTRIES, INC. sued herein as NL METALS; SENIOR ENGINEERING COMPANY; PROMARK GROUP WEST for MAJOR PAINT COMPANY; H-1 L TOOTH COMPANY for PRECISION HEAT TREATING COMPANY and HI-PRODUCTION FORGE COMPANY; ANCHORLOK CORPORATION; COOPER DRUM CO. for SUPERIOR DRUM; HUGHES AIRCRAFT COMPANY: SUPERIOR INDUSTRIES INTERNATIONAL, INC.; FLINT INK CORPORATION; THE TIMES MIRROR COMPANY, LOS ANGELES TIMES DIVISION and TIMES MIRROR PRESS; HUNT-WESSON, INC.; HATERFOHD

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WEDGEWOOD USA INC. for FRANCISCAN CERAMICS; DELTA AIR LINES, INC., for itself and for WESTERN AIRLINES; EMERSON & CUMING, INC.; B&C PLATING COMPANY; INTERNATIONAL PAPER COMPANY; ROCKWELL INTERNATIONAL CORPORATION; THE PROCTER AND GAMBLE MANUFACTURING COMPANY; DRESSER INDUSTRIES INC. for HAGCOBAR AND PACIFIC PUMPS; MAYTAG CORPORATION; BRIDGESTONE/FIRESTONE, INC.; CARNATION COMPANY; WELCHES OVERALL CLEANING COMPANY, INC.! DUNN-EDWARDS CORPORATION; TRANSPORTATION

10 LEASING CO.; CLOUGHERTY PACKING COMPANY: "21"

11 INTERNATIONAL HOLDINGS, INC., formerly GENERAL FELT

12 INDUSTRIES; FERRO CORPORATION for itself and for PRODUCTOL

13 CHEMICAL DIVISION; SAFEWAY I INC.; WILLAMETTE INDUSTRIES,

14j INC.; ARATEX SERVICES, INC. I for and d/b/a RED STAR

15 INDUSTRIAL SERVICE; OIL AND SOLVENT PROCESS CO., a

16 subsidiary of chemical Waste Management, Inc.; BERWIND

17 RAILWAY SERVICE COMPANY; LUXFER USA LIMITED; McAULEY

18 LCX CORPORATION, formerly McAuley Oil Company; FEDERAL

19 EXPRESS CORPORATION; UNITED AIR LINES, INC.; SURFACE

20 PROTECTION INDUSTRIES, INC. On behalf of ZOLATONE PROCESS,

21 INC.; WIU1IHGT0N LIQUID BULK TERMINALS: TREE ISLAND

22 INDUSTRIEST LTD.: GENERAL LATEX AND CHEMICAL CORPORATION:

23 GOULD INC.; DECALTA OIL COMPANY; VEST, INC. (formerly

24 known as BERNARD EPPS & CO.); BEHR PROCESS CORPORATION;

25 ARMCO INC.; BORDEN, INC.; SOCO-WESTERN CHEMICAL

2 6 CORPORATION for WESTERN CHEMICAL & MANUFACTURING CO.;

27 FREEPORT-MCMORAN OIL AND GAS COMPANY, a division of

28 Freeport-McMoRan Inc.,

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successor by mergers to PETRO-LEWIS CORPORATION; REISNER METALS, INC.; SUPRACOTE, INC.; KENOSHA AUTO TRANSPORT CORPORATION; BLACKTOP MATERIALS COMPANY: GATX TERMINALS CORPORATION: VAN HATERS t ROGERS INC.: PRIHERICA HOLDINGS, INC.; COOPER tl BRAIN, INC. ; UNITED STATES GYPSUM COMPANY; LONGVIEW FIBRE COMPANY; CONOPCO, INC; MASTER PROCESSING CORPORATION; PLYWOOD PANELS INC., formerly DAVIDSON P.W.P.; PACKAGING CORPORATION OF AMERICA for EKCO PRODUCTS: CALMAT CO.; AMTRAK - NATIONAL RAILROAD PASSENGER CORPORATION: FORD MOTOR COMPANY; RLL CORPORATION (formerly known as MAX FACTOR & CO.); WESTINGHOUSE ELECTRIC CORPORATION for itself and for SEVEN-UP BOTTLING CO. OF L.A.; COCA-COLA BOTTLING COMPANY OF LOS ANGELES; INTERNATIONAL EXTRUSION CORPORATION; HELUJAN PROPERTIES; OWENS-ILLINOIS, INC.. on behalf of itself and Its present and former subsidiaries Libbey Glass, Inc., Ouens-Brockway Glass Container Inc. and Nekoosa Packaging Corporation, successor by merger to 01 Los Angeles STS Inc.; UNITED PARCEL SERVICE, INC.; FIBREBOARD CORPORATION; DEFT, INC.; JAMES RIVER II, INC. for CROWN ZELLERBACH, successor in interest with respect to Sheila Street and Garfield Avenue Plants; GAYI^RD CONTAINER CORPORATION for CROWN ZELLIRBACH, successor in interest for Baldwin Park Boulevard Plant; DEUTSCH COMPANY; ROYAL INDUSTRIES; ALCOA COMPOSITES, INC., on behalf of WESLOCK DIVISION; CITY OF INGLEWOOD; CITY OF LOS ANGELES; LATCHFORD GLASS COMPANY; ROYAL ALUMINUM; MCKESSON WATER PRODUCTS

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COMPANY formerly 9PARKLETTS DRINKING WATER CORP.; RENTA UNIFORM! CHAMPION INTERNATIONAL CORPORATION for itself and for ST. REGIS PAPER COMPANY; PRUDENTIAL OVERALL SUPPLY; PACIFIC TUBE COMPANY; HYDRIL COMPANY; STARKIST FOODS, INC.; GEORGIA-PACIFIC CORPORATION; CAPITOL METALS CO., INC.; B.J. SERVICES COMPANY (formerly B.J. Service Equipment Company) for itself and for B.J. HUGHES; INLAND CONTAINER CORPORATION! THE HERTZ CORPORATION; CHRYSLER CORPORATION for itself and for NU CAR PREP SYSTEMS, INC.;

10 BLACK AND DECKER CORPORATION on behalf of MCCULLOCH

11 CORPORATION; INTERSTATE BRANDS CORPORATION; GENERAL ELECTRIC

12 9 COMPANY; CHROME CRANKSHAFT I CO., INC.; TELEDYNE CAST

13j PRODUCTS; TELEDYNE LAARS; 1 TELEDYNE LINAIR; TELEDYNE

14 1 MICROELECTRONICS; TELEDYNE I POST; TELEDYNE SPRAGUE

15 ENGINEERING; ATOCHEM NORTH 1 AMERICA, INC. (PUREX) for

161 i t s e l f and f o r M S T METALS, I M S T PLATING, M S T

17 I CHEMICALS, AND PENNWALT; ARMSTRONG WORLD INDUSTRIES,

18 INC.; SHASTA BEVERAGES, INC.; MYRDIN INC.; VOI SHAH;

19 SOUTHWEST FOREST INDUSTRIES, INC.; PERVO PAINT COMPANY; THE

20 FLINTKOTE COMPANY; BASF CORPORATION on behalf of

21 INHONT INK CORPORATION; GRANT OIL TOOL COMPANY (a MASCO

22 INDUSTRIES- CO. , d/b/a MASX ENERGY SERVICES GROUP, INC.);

23 NORRIS INDUSTRIES, INC./WEISER LOCK DIVISION; BIRD CORP.

24 (BIRD AND SON INC.); COCA COLA USA, a division of THE COCA-

25 COLA COMPANY;

2 6 Defendants.

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III.

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Third Partial

y.APLP.Pr CP|»Te.NT8

JURISDICTION 3

PARTIES BOUHD 3

DENIAL or LIABILITY 5

SITE BACXORODND 6

DEFINITIONS 8

aCHERAL PROVtaiOMS 15

WORK TO BE PERFORMED 17

EXCLUDED irORK 29

ADDITIONAL WORK 34

PERIODIC REVIEW TO ASSURE PROTECTION OF HDKAM

HEALTH AMD TBE ENVIRONMENT 35

SAFETY, HEALTH AND EMERGENCY RESPONSE PLAN . . 36

<]OALITY ASSDRAMCB/gOALITY CONTROL 36

PROJECT COOROIMATORS 38

ACCESS 41

DATA EXCHANGE: SAMPLING AMD AMALYSIS . . . . 43

RETENTION OF RECORDS 48

REIMBURSEMENT OF RESPONSE COSTS 51

ESCROW ACCOUNT 57

PRIORITY OF CLAIMS 61

INOEKHIFICATIOM AMD IMBORANCE 62

FORCE MAJEURE 66

DISPUTE RESOLUTION 69

STIPULATED PENALTIES 73

COVENANTS HOT TO SUE 83

CERTIFICATE OF COMPLETION 91

Conaent Decree Page 1

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TABLE OF CONTENTS (Cont'd)

REtfBRVATtOM OF RIGHTS . . . .

FORM OF NOTICE

MODIFICATION

ADMISSIBILITY OF DATA . . . .

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CONTRIBUTION PROTBCTIOll 100

DEFEHDAHTS' RIOBT OF CONTRIBUTION AMD

INDEMNITY AND COVENANT MOT TO SUE EACB OTHER . 101

WAIVER OF CLAIM-SPLITTINO DEFENSE 102

CONNUMITY RELATIONS 102

LODQIKa AND PUBLIC PARTICIPATION 103

STATE AMD LOCAL AGENCY PARTICIPATION 103

NOTICE TO THE STATE 105

OTHER CLAIMS 105

CONTIMUIMG JURISDICTION 106

REPRESENTATIVE AUTHORITY 106

EFFECTIVE DATE 107

SEVERABILITY 107

TERMINATION AMD BATIBFACTIOM 107

SECTION HEADINGS 109

COUNTERPARTS 109

Third Partial Conaent Decree Page li

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1 THIRD PARTIAL CONSENT DECREE

2

3 WHEREAS, the United States of America (hereinafter "United

4 States"), on behalf of the Administrator of the United States En-

5 vironmental Protection Agency (hereinafter "EPA") , the State of

6 California on behalf of the D^^partment of Toxic Substances

7 Control (hereinafter "the State"), and the California Hazardous

B Substance Account, have filed concurrently with this Third

9 Partial Consent Decree a complaint in this matter pursuant to the

10 Comprehensive Environmental Response, Compensation, and Liability

11 Act, 42 U.S.C. $ 9601, et seo.. as amended by the Superfund

12 Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499,

13 100 Stat. 1613 (1986) (hereinafter "CERCLA"). The complaint

14 includes pendent claims by the State pursuant to the Hazardous

15 Substance Account Act, California Health and Safety Code § 25300,

16 et seq., California Civil Code f 3494, and California Health and

17 Safety Code 5§ 205 and 206. The complaint seeks to compel the

18 Defendants (those parties identified in paragraph II.B of Section

19 II (Parties Bound) and hereinafter referred to as "Defendants")

20 to perform certain remedial actions and to recover certain

21 response costs that have been and will be incurred by the United

22 States and the State in response to alleged releases and

23 threatened releases of hazardous substances from the facility

24 known as the Operating Industries, Inc. site (hereinafter "OII

25 Site" or the "Site") located at 900 Potrero Grande Drive,

26 Monterey Park, California.

27j WHEREAS, the United States, the State, and the California

28| Hazardous Substance Account (hereinafter "Plaintiffs") allege

Third Partial consent Decree P"?® ^

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that the Operating Industries, Inc. landfill is a facility as

defined in Section 101(9) of CERCLA, 42 U.S.C. § 9601(9).

WHEREAS, Plaintiffs allege that the Defendants are persons,

as defined in Section 101(21) of CERCLA, 42 U.S.C. S 9601(21) and

wastes and constituents thereof generated by the Defendants sent

to and disposed of at the Site, are hazardous substances, as

defined in Section 101(14) of CERCLA, 42 U.S.C. S 960l(l4), and

California Health and Safety Code S§ 25316 and 25317.

WHEREAS, Plaintiffs allege that the past, present, and

potential migrations of hazardous substances from the Site

constitute actual and threatened releases, as defined in Section

101(22) of CERCLA, 42 U.S.C. i 9601(22), and California Health

and Safety Code S§ 25320 and 25321, and the Defendants are liable

under Section 107(a) of CERCLA, 42 U.S.C. S 9607(a), and

California Health and Safety Code § 25360.

WHEREAS, pursuant to Sections 121 and 122 of CERCLA, 42

U.S.C. §§ 9621 and 9622, Plaintiffs and the Defendants have each

stipulated and agreed to the making and entry of this Third

Partial Consent Decree (hereinafter "Decree" or "Consent Decree")

prior to the taking of any testimony, and in full settlement with

Defendants for the claims raised in the complaint.

WHEREAS, Plaintiffs and the Defendants agree that the

settlement of the claims raised in the complaint against the

Defendants and entry of this Consent Decree is in good faith, in

an effort to avoid expensive and protracted litigation, without

any admission or finding of liability or fault as to any

allegation or matter.

Third Partial Consent Decree Page 2

iD-

HOW THEREFORE, i t i s ORDERED, ADJUDGED, AND DECREED a s f o l

l o w s :

I. JURISDICTION

The Court has jurisdiction over the subject matter of this

action pursuant to 28 U.S.C. S§ 1331 and 1345, and CERCLA, 42

U.S.C. § 9601, et seq. and pendent jurisdiction over the claims

arising under the laws of California. Solely for the purposes of

this Consent Decree and the underlying complaint, each Defendant

waives service of summons and agrees to submit to the

jurisdiction of this Court and to venue in this District.

Defendants shall not challenge this Court's jurisdiction to enter

and enforce this Consent Decree. Settling Defendants agree not

to challenge or object to entry of this Decree by the Court

unless the United States has notified the Defendants in writing

that it no longer supports entry of the Decree or that it seeks

to modify the Decree.

II. PARTIES BOUND

A. The parties to this Consent Decree are the United

States of America, the State, the California Hazardous Substance

Account, and the Defendants.

B. Defendants are defendants that have agreed to pay the

specified amounts under the Schedules set forth in Exhibit C and

are identified in Exhibit C ("Cash Defendants"), and defendants

that have agreed to undertake the Work and certain other

obligations set forth in this Decree and are identified in

281 Exhibit D ("Work Defendants").


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C. This Consent Decree applies to and is binding upon the

United States, the State, the California Hazardous Substance

Account, and upon Defendants and Defendants' agents, successors

and assigns, and upon all Contractors or other persons acting

under or for Defendants. Any change in ownership, partnership

status or corporate status of a Defendant including, but not

limited to, any transfer of assets or real or personal property,

shall in no way alter such Defendant's responsibilities under

this Consent Decree. Each Defendant shall be responsible and

shall remain responsible for carrying out all activities required

of that Defendant under this Consent Decree. All actions taken

by the State pursuant to this Decree, including all approvals,

reservations of rights, and covenants not to sue are solely those

of the California Department of Toxic Substances Control (DTSC)

and of no other agency except that the California Attorney

General also covenants not to sue the Defendants as provided in

Section XXIV (Covenants Not To Sue, page 83).

D. Work Defendants shall provide a copy of this Consent

Decree and shall provide all relevant additions to this Decree,

to each person, including all contractors and subcontractors,

retained to perform the Work required by this Consent Decree and

to each person representing any Work Defendant with respect to

the Site or the Work and shall condition any contract for the

Work upon compliance with this Consent Decree. Work Defendants

shall nonetheless be responsible for ensuring that their

contractors and subcontractors perform the Work contemplated

herein in accordance with this Consent Decree. With regard to

the activities undertaken pursuant to this Consent Decree, each

Third Partial Consent Daoraa Page 4

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1 contractor and subcontractor shall be deemed to be in a

2 contractual relationship with the Work Defendants within the

3 meaning of Section 107(b)(3) of CERCLA, 42 U.S.C. § 9607(b)(3).

4 E. Work Defendants shall be jointly and severally

5 responsible for the performance of the Work Defendants'

6 obligations required by thia Decree. In the event of the

7 inability to pay or insolvency of any one or more of the Work

8 Defendants, regardless of whether or not that Work Defendant or

9 Work Defendants enter into formal bankruptcy proceedings, or in

10 the event that for any other reason one or more of the Work

11 Defendants do not participate in the implementation of the Work,

12 the remaining Work Defendants agree and commit to complete the

13 Work and activities provided for in this Decree.

14

15 III. DENIAL OF LIABILITY

16 The Defendants deny any and all legal or equitable liability

17 under any federal, state, or local statute, regulation,

18 ordinance, or common law for any response costs, damages or

19 claims caused by or arising out of conditions at or arising from

20 the Site. By entering into this Decree, or by taking any action

21 in accordance with it. Defendants do not admit any allegations

22 contained herein or in the complaint, nor do Defendants admit

23 liability for any purpose or admit any issues of law or fact or

24 any responsibility for the alleged release or threat of release

25 of any hazardous substance into the environment. Nothing in this

26 Section shall alter Defendants' agreement not to challenge the

27 Court's jurisdiction as set forth in Section I (Jurisdiction,

28 page 3) .

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IV. SITE BACKGROUND

The following is a summary of the Site background as alleged

by the United States and the State which, for the purposes of

this Decree, Defendants neither admit nor deny:

A. The operating Industries, Inc. landfill is a 190-acre

facility located at 900 Potrero Grande Drive, Monterey Park,

California. The Site operated from 1948 through 1984, and over

the course of its operation, accepted industrial solid, liquid

and hazardous wastes and municipal trash. Wastes accepted by OII

include hazardous substances as defined in Section 101(14) of

CERCLA, 42 U.S.C. § 9601(14), and California Health and Safety

Code SS 25316 and 25317.

B. The Site is located on the southwestern flank of the La

Merced hills (also called the Montebello hills), and is divided

by California Highway 60 (Pomona Freeway), which runs roughly

east-west through the site, dividing it into a 45-acre North Par

cel and 145-acre South Parcel. The Site is located at the bound

ary between the San Gabriel groundwater basin to the north and

the Los Angeles Central groundwater basin to the south. The im

portant water-bearing units underlying the Los Angeles and San

Gabriel Basins, as well as the Site, are from oldest to youngest,

upper Pliocene Pico Formation, lower Pleistocene San Pedro Forma

tion, upper Pleistocene older alluvium (including "terrace

gravels"), and the Recent Alluvium (California Department of

Water Resources, 1961, 1966). The San Pedro Formation contains

the five major aquifers of the Los Angeles Central Basin and the

San Gabriel Basin, the Jackson, Hollydale, Lynwood, Silverado and

Sunnyside aquifers. The lower Pliocene Repetto formation and


ll older formations are found at depths greater than 1500 feet. The

2 Site is approximately one mile west of the Whittier Narrows

3 groundwater recharge area and the Rio Hondo River.

4 C. The Site was proposed for inclusion on the National

5 Priorities List (NPL) in October 1984, and was subsequently

6 placed on the NPL in May 1986, in accordance with Section

7 105(a)(8) of CERCLA, 42 U.S.C. $ 9605(a)(8).

8 D. The contaminants found at the Site include hazardous

9 substances as defined by Section 101(14) of CERCLA, 42 U.S.C.

10 $ 9601(14) or California Health and Safety Code SS 25316 and

11 25317.

12 E. There have been releases of hazardous substances from

13 the Site and the Site poses numerous threats to human health and

14 the environment. The population in proximity to the Site include

15 the nearby residents of the City of Montebello and the City of

16 Monterey Park, those who travel on the section of the Pomona

17 Freeway which transects the site, and workers in the several

IB businesses located on or near the Site.

19 F. The EPA is currently performing the Remedial

20 Investigation/Feasibility Study ("RI/FS") at the Site. The RI/FS

21 was begun in 1984. When the RI/FS is completed, it will result

22 in the selection, design and implementation of a final remedy for

23 the Site.

24 G. EPA has identified three operable units to date: Site

25 Control and Monitoring (SCM); Leachate Management (LM); and Gas

26 Migration Control and Landfill Cover (Gas). The Gas Operable

27 Unit is the subject of this Consent Decree. The first two

28 operable units (SCM and LM) were the subject of a prior

Third Partial consent Decree Page 7

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settlement, memorialized in a partial Consent Decree captioned

United States et al. v. Chevron Chemical Company, et al.. No. CV

88 7196 (MRP)Kx, and entered by the Court on Hay 11, 1989 (the

First Decree). Additional parties have signed a Second Partial

Consent Decree (the Second Decree) to resolve their liability for

the same matters addressed in the First Decree. The Second

Partial Consent Decree was entered by the Court on September 17,

1991.

V. DEFINITIONS

Unless otherwise expressly provided, terms used in this

Consent Decree which are defined in CERCLA or in regulations

promulgated under CERCLA shall have the meaning assigned to them |

therein. Whenever terms listed below are used in this consent

Decree or its Exhibits, the following definitions shall apply:

A. "Cash Defendants" shall mean the Defendants identified

in Exhibit C, that have agreed to pay the amounts

specified in the Schedule(s) set forth in Exhibit C.

B. "CERCLA" shall mean the Comprehensive Environmental

Response, Compensation, and Liability Act of 1980, as

amended, 42 U.S.C. S 9601, et sea.

C. "Consent Decree" or "Decree" shall mean this Third

Partial Consent Decree and its Exhibits.

D. "Construction Completion Report" shall mean the Report

to be prepared by the Work Defendants and submitted to

EPA pursuant to Section 5.5.8 of the Scope of Work.

E. "Contractor" shall mean the individual, company or com

panies retained by or on behalf of the Work Defendants


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to undertake and complete the Work.

F. "Day" shall mean a calendar day unless expressly stated

to be a working day. "Working day" shall mean a day

other than a Saturday, Sunday or Federal holiday. In

computing any period of time under this Consent Decree,

where the last day would fall on a Saturday, Sunday, or

Federal holiday, the period shall run until the close

of business of the next working day.

G. "Defendants" shall include both the Cash Defendants and

the Work Defendants, as defined herein and as listed in

Exhibits C and D, respectively, to this Consent Decree.

H. "DTSC" shall mean the California Department of Toxic

Substances Control, the successor entity to the

California Department of Health Services.

I. "EPA" shall mean the United States Environmental

Protection Agency and any successor departments or

agencies of the United States.

J. "Excluded Work" shall mean the Cover Protection

Component of the Cover System for the North Slope of

the South Parcel, the Thermal Destruction Facility, and

the North Parcel, as those terms are defined in Section

VIII (Excluded Work, page 29) and in the Scope of Work.

K. "Excluded Work Completion Report" shall mean the Report

to be prepared by the Work Defendants and submitted to

EPA pursuant to Section 5.8 of the Scope of Work.

L. "Exhibit A" shall mean the Gas Record of Decision, as

defined below, for the Gas operable Unit, attached

hereto.


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M. "Exhibit B" shall mean the Scope of Work, as defined

below, for the Gas Operable Unit, attached hereto.

N. "Exhibit C" shall mean the list of Cash Defendants and

schedule of payments to be made by them, attached

hereto.

O. "Exhibit D" shall mean the list of Work Defendants

attached hereto.

P. "Exhibit E" shall mean the Third Partial Consent Decree

1991 Volumetric List attached hereto.

Q. "Exhibit F" shall mean the List of Settling

Subsidiaries, Divisions, and Affiliated Entities

attached hereto.

R. "First Decree" shall mean the first Partial Consent

Decree, captioned United States et al. v. Chevron

Chemical Comoany. et al.. No. CV 88 7196 (MRP)Kx, and

entered by the Court on May 11, 1989.

S. "Future Oversight Costs" shall mean all costs incurred

by the EPA and other agencies and departments of the

United States, by the State, and by contractors for

either of them in oversight of the Work and Excluded

Work. Future Oversight Costs shall include: indirect

costs, payroll costs, contractor costs, travel costs,

laboratory costs, the costs incurred pursuant to

Section XIV (Access, page 41), and the costs of

reviewing or developing Plans, Reports and other items

pursuant to this Consent Decree, verifying the Work or

Excluded Work, or otherwise implementing or enforcing

this Consent Decree, from and after the date of entry


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of this Decree. Future Oversight Costs do not include

any other cost incurred by the EPA, other agencies or

departments of the United states, the State, or

contractors of either of them, including, but not

limited to: (1) all costs incurred in the performance

of the Remedial Investigation/Feasibility Study at the

Site; (2) all costs associated with emergency removals,

or additional work deemed necessary or approved by EPA;

(3) all costs incurred in oversight of the Gas Operable

Unit which are not in oversight of the Work or the

Excluded Work; (4) all costs for oversight of any other

operable unit; and (5) all costs for oversight of the

final remedy at the Site.

"Gas Operable Unit" shall mean the Gas Migration

Control and Landfill Cover Operable Unit, as described

in the Gas Record of Decision, as amended on September

28, 1990.

"Gas Record of Decision" or "Gas ROD" shall mean the

Record of Decision relating to the Gas Migration

Control and Landfill Cover Operable Unit at the Site

signed by the EPA Region IX Regional Administrator on

September 30, 1988, as amended on September 28, 1990,

which describes the Gas Operable Unit and which is

attached as Exhibit A.

"National Contingency Plan" or "NCP" shall refer to the

National Oil and Hazardous Substances Pollution Contin

gency Plan promulgated pursuant to Section 105 of

CERCLA, 42 U.S.C. S 9605, codified at 40 C.F.K. Part

Third Partial consent Decree page 11

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300.

W. "OII Site" or the "Site" shall mean the "facility," as

that term is defined at Section 101(9) of CERCLA, 42

U.S.C. s 9601(9), and shall mean the landfill located

at 900 Potrero Grande Drive in Monterey Park,

California.

X. "Oversight" shall mean inspection by the EPA, the

United States Army Corps of Engineers (USAGE), their

contractors, or the State and their representatives, of

remedial work and all other actions necessary to verify

the adequacy of performance of activities and of the

Plans, Reports and other items relating to the OII Site

performed or submitted by Work Defendants pursuant to

this Decree.

Y. "Parties" shall mean the United states, the State and

the Defendants.

Z. "Past Response Costs" shall mean: (1) all costs,

including, but not limited to, interest and indirect

costs, that the United States has incurred with regard

to the Site beginning on June 1, 1988 through December I

31, 1990, but excluding oversight expenses for the

First Decree and the Second Decree paid or to be paid

by the persons who are Defendants under those Decrees;

and (2) all costs, including, but not limited to,

interest and indirect costs, that the State and the

California Hazardous Substance Account have incurred

with regard to the Site beginning on June 1, 1988

through December 31, 1990.

Third partial Consent Decree Page 12

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AA. "Performance Standards" shall mean those cleanup

standards, standards of control, and other substantive

requirements, criteria or limitations, set forth in

Exhibit A (Gas ROD), Exhibit B (Scope of Work), and

Section VII of this Decree (Work to be Performed, page

17).

AB. "Plaintiffs" shall mean the United States, the State,

and the Califomia Hazardous substance Account.

AC. "Plan(s)" shall mean the plans and designs developed by

the Work Defendants which detail the elements of the

Work to be conducted pursuant to this Consent Decree.

AD. "Progress Report" shall mean the Report(s) prepared by

Work Defendants pursuant to paragraph VII.C.4.b (on

page 26) of Section VII (Work To Be Performed).

AE. "RCRA" shall mean the Solid Waste Disposal Act, as

amended, 42 U.S.C. S 6901, et seq. (also known as the

Resource Conservation and Recovery Act).

AF. "Report(s)" shall mean the Reports developed by the

Work Defendants in compliance with this Decree,

detailing the Work and the results of its

implementation.

AG. "Scope of Work" or "SOW" shall mean the scope of work

for implementation of the Work at the Site, as set

forth in Exhibit B to this Consent Decree and any

modifications thereto pursuant to this Decree.

AH. "Second Decree" shall mean the Second Partial Consent

Decree which has been executed by certain companies

identified as potentially responsible parties to

Third Partial Consent Decree

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resolve their liability for the same matters addressed

in the First Decree and entered by the Court on

September 17, 1991.

"State" shall mean the State of California on behalf of

the Department of Toxic Substances Control.

"United States" shall mean the United States of

America.

"USAGE" shall mean the United States Army Corps of

Engineers.

"Waste Material" shall mean (1) any "hazardous

substance" as defined under Section 101(14) of CERCLA,

42 U.S.C. s 9601(14); (2) any "pollutant or

contaminant" under Section 101(33) of CERCLA, 42 U.S.C.

S 9601(33)! and (3) any "hazardous substance" as

defined under California Health and Safety Code

SS 25316 and 25317.

"Work" shall mean the implementation, in accordance

with this Decree of the tasks and activities defined

herein, including but not limited to: Section VII

(Work To Be Performed, page 17); Section IX (Additional

Work, page 34); Section XVI (Retention of Records, page

48); Section XV (Data Exchange: Sampling and Analysis,

page 43); Section X (Periodic Review, page 35); the

SOW, as may be modified pursuant to the provisions of

this Consent Decree; and any schedules or Plans

required to be submitted pursuant to this Decree or the

SOW.

AN. "Work Completion Report" shall mean the Report

AM


-JLV Page 14

1 submitted by the Work Defendants pursuant to this

2 Decree, detailing the Work performed pursuant to this

3 Decree.

4 AO. "Work Defendants" are the Defendants identified in

5 Exhibit D, that have agreed to undertake the Work and

6 certain other obligations set forth in this Decree.

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8 VI. GENERAL PROVISIOMB

9 A. Purpose

10 The purposes of this Consent Decree are to protect public

11 health and welfare and the environment from releases or

12 threatened releases of Waste Material from the Site by the design

13 and implementation of the remedial action and operations,

14 monitoring, and maintenance outlined in Section VII (Work to be

15 Performed, page 17), to resolve the dispute among the Parties as

16 to whether remedial action may be necessary for the Gas Operable

17 Unit, to reimburse certain of Plaintiffs' Past Response Costs and

18 the United States' and the State's Future Oversight Costs, and to

19 settle any and all claims against Defendants asserted by

20 Plaintiffs in the complaint filed in this matter.

21 B. Commitments bv Settling Defendants

22 work Defendants shall finance and perform the Work in

23 accordance with this Consent Decree, including, but not limited

24 to, the SOW and all standards. Plans, specifications, and

25 schedules set forth in or developed pursuant to this Consent

26 Decree. Defendants shall also reimburse the United States and

27 the State for Past Response Costs and Future Oversight Costs as

28 provided in this Consent Decree.

Third Partial Consent Decree Page IS

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C. Final Remedv

The Parties agree that this Gas Operable Unit does not

constitute the final remedy for this Site. Defendants agree that

the final remedy will be determined by EPA after completion of a

remedial investigation/feasibility study ("RI/FS") and execution

by the EPA of a Record of Decision which determines the final

remedy. The Parties also agree that this Consent Decree does not

address the operations, maintenance and monitoring of the Work

and Excluded Work after EPA approval of the Work Completion

Report.

D. Compliance with Aoolicable Law

All activities undertaken by Defendants pursuant to this

Consent Decree shall be performed in accordance with the

requirements of all applicable Federal, state and local laws and

regulations, including the NCP. All Parties agree and the Court

hereby determines that the remedy selected by the Gas Record of

Decision is consistent with the final remedy and consistent with

the NCP. All Parties agree that the Work, if performed in

accordance with the requirements of this Decree, is consistent

with the NCP. The Work performed in the implementation of this

Gas Operable Unit shall meet the Performance Standards as defined

in this Decree.

E. Cpntlictg

In the event of conflict between any provision in the body

of this Decree and any provision of the Scope of Work or any

attachment to the SOW, the provision in the body of this Decree

shall control. In the event of any Inconsistency between the sow

and the Plans, the SOW shall govern.

Third Partial Conaent Decree -3L.4--

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VII. WORK TO BE PERFORMED

A. General Obliqqtjpns Regarding the Work

1. The Work Defendants shall finance and perform, at

4j their expense, the implementation of the Work as required by this

5II Decree and the Exhibits hereto.

61 2. Defendants shall conduct no activities at the Site

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except:

a. activities specifically authorized under this

Decree;

b. activities required by and in furtherance of

the Work under this Consent Decree;

c. activities specifically authorized, in

writing, by EPA; or

d. activities performed by persons authorized

under the First Decree and the Second Decree to conduct such

activities.

3. Defendants shall not in any way impede the

performance of the Excluded Work or any activities being

performed under the First Decree or the Second Decree. The

Parties recognize that these activities may overlap and will

require integration and coordination among all persons performing

them. The Parties shall use best efforts to minimize conflicts

and to coordinate their activities through the EPA Project

Coordinators, pursuant to Section 3.0 (Integration and

Coordination) of the SOW.

4. Notwithstanding any approvals which may be granted

by the United States or the State or other governmental entities,

the work Defendants shall not be relieved of any liability


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arising from or relating to their acts or omissions or the acts

or omissions of any of their contractors, subcontractors, or any

other person acting on their behalf in the performance of the

Work or their failure to perform or complete the Work.

5. The Work Defendants shall perform the Work for the

Site as described in: this Decree; the Gas ROD, attached hereto

as Exhibit A; and the Scope of Work attached hereto as Exhibit B

and any modifications thereto pursuant to the terms of this

Decree. The Gas ROD, the SOW, and all modifications to the SOW

are hereby incorporated by reference and made a part of this

Decree, to the extent not inconsistent with this Decree. The

Work shall be performed in accordance with all the provisions of

this Decree, the SOW, any modifications to the SOW, and all

design specifications. Plans or schedules developed pursuant to

this Decree or approved by EPA.

6. The Parties acknowledge and agree that neither the

SOW, the Plans nor any approvals, permits or other permissions

which may be granted by EPA related to this Consent Decree con

stitute a warranty or representation of any kind by the United

States that the SOW or Plans will achieve the Performance

Standards set forth in the Gas ROD and in paragraph VII.C.5

(Performance Standards, page 28) of this Section VII (Work To Be

Performed) and shall not foreclose the United States from seeking

perfotnnance of all terms and conditions of this Consent Decree.

Except as provided in Section XXIV (Covenants Not To Sue, page

83), nothing in this Consent Decree shall be construed to relieve

Defendants of their obligation to achieve all performance

Standards set forth in the Decree.


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Ij 7. While the Work Defendants may collect, treat,

2J stage, and secure materials on-site, they shall not redeposit

31 material back into the Site without the explicit approval of EPA.

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8. The Work Defendants shall dispose of any materials

taken off-site in compliance with the EPA's Revised Procedures

for Implementing Off-Site Response Actions. EPA OSWER Directive

9834.11, November 13, 1987 ("Off-site Policy"), if applicable.

9. The Work Defendants shall submit all required

Plans, Reports and items pursuant to the provisions of Exhibit B,

this Section VII (Work To Be Performed), Section XV (Data

Exchange, page 43), Section IX (Additional Work, page 34),

Section XVIII (Escrow Account, page 57), Section X (Periodic

Review, page 35), and other applicable sections of this Decree.

10. Any facilities constructed under the terms of this

Consent Decree shall not be used to treat waste or Waste

Materials other than those associated with the Oil Site.

11. Permits

a. As provided in Section 121(e) of CERCLA, 42

U.S.C. S 9621(e), and the NCP, permits shall not be required for

201 any portion of the Work conducted entirely on site. Where any

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portion of the Work requires a Federal, state or local permit or

approval. Work Defendants shall timely submit applications and

shall obtain all such permits or approvals.

b. This Consent Decree is not, and shall not be

construed to be, a permit issued pursuant to any Federal or state

statute or regulation.

12. EPA will make available to Work Defendants

relevant EPA guidance documents.


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B. Wor)c Contractor selection and Oualifieations

1. All Work to be performed by the Work Defendants

pursuant to this Consent Decree shall be under the direction and

supervision of, and performed by, a qualified contractor(s) with

expertise in investigation, analysis and remediation of hazardous

waste problems, with particular expertise in landfill gas

collection and migration control systems and landfill cover

systems, as well as qualifications to design, construct, operate

and maintain a landfill gas collection system, a landfill gas

thermal destruction facility, and landfill cover. All Work

performed by Work Defendants shall be performed by a qualified

contractor(s) or subcontractor(s) in accordance with the con

ditions and schedules specified in or developed pursuant to this

Decree.

2. No contractor or subcontractor shall perform any

work under this Decree after disapproval of the contractor or

subcontractor by EPA, under the provisions of this paragraph

VII.B; provided, however, that work may continue with EPA

approval to provide for the transition of the work to any

replacement contractor or subcontractor.

3. No later than seven (7) days after the effective;

date of this Decree and prior to the initiation of Work at the

site, the Work Defendants shall notify EPA, in writing, of the

name and qualifications of the selected contractor(s] and the

name and title of the contractor(s)' project manager. The Work

Defendants shall notify EPA, in writing, of the names of any

other contractor(s) and/or subcontractor(s) selected to carry out

the Work pursuant to this Consent Decree, as such contractor(s)


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and/or subcontractor(s) are retained.

4. In the event that EPA disapproves of any selected

contractor or subcontractor, EPA shall notify Work Defendants in

writing of its disapproval and the basis for its decision. If

EPA disapproves of the selection of any contractor or

subcontractor, within 14 days of receipt of EPA's disapproval,

Work Defendants shall notify EPA of the name and qualifications

of the selected replacement contractor. EPA shall provide

written notice if it disapproves the replacement contractor.

Nothing in this paragraph shall limit the Work Defendants' right

to invoke dispute resolution under Section XXII (Dispute

Resolution, page 69).

5. If at any time Work Defendants propose to change

their prime contractor or any principal contractor or

subcontractor. Work Defendants shall give written notice to EPA

28 days prior to any change in contractor. The new proposed

contractor or subcontractor shall be subject to the procedures

set forth in the preceding paragraph VII.B.4.

C. Work To Be Undertaken

The Work shall be conducted pursuant to the SOW attached to

this Decree as Exhibit B. The Work and deliverables required by

this Decree and the SOW shall be conducted pursuant to the

schedules set forth in this Decree and the SOW.

1. Description of the Work

a. The Work includes all activities, not defined

as Excluded Work, necessary for the implementation of the

predesign, design, construction, operations, maintenance and

monitoring of a Landfill Gas Control System, a Cover System and a


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Surface Water Management System at the Oil Site. The Work

includes the development of management plans as well as

communication, coordination and integration procedures. The

overall objective for the performance of the Work is to construct

and then operate and maintain for three (3) years a functional

facility which meets all Performance Standards.

b. At the time that construction activities

begin in a particular geographic area, the Work Defendants shall

be responsible for all operation, maintenance, and monitoring

activities related to the Work, and for those Site Control and

Monitoring (SCM) activities previously being conducted under the

First Decree that correspond to that geographic area. In

addition to the activities to be performed by Work Defendants

under this Decree, Work Defendants shall be responsible for

activities previously being conducted under SCM, including but

not limited to Task S.l Gas Management, Task S.2

Stormwater/Erosion Control, Task S.3 Landscaping/Irrigation, and

Task S.4 Access Roads, as set forth in the First Decree. These

activities previously being conducted under the First Decree

shall continue until EPA approval of the Work Completion Report

or termination of the First Decree, whichever is later. Nothing

in this paragraph shall be construed to affect the rights and

obligations of the defendants to the First and Second Decrees,

including but not limited to the covenants not to sue, as set

forth under those Decrees.

c. In the event that Work activities result in

the alteration, destruction or abandonment of any Site facility

not related to the Work but necessary for Site work, Work


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Defendants shall either repair or replace, as necessary, such

facility with one that provides the same level of control or

function, as appropriate.

2. Basic Elements of the Work

a. Gas control Svstem The gas control system

includes the following components: gas collection; liquids

collection: liquids treatment; and gas monitoring. The general

objectives of this system are: to collect and transport landfill

gas through extraction wells, surface collectors, conveyance

lines, and other equipment, to an on-site thermal destruction

facility; and to collect and transport recovered liquids

(excluding surface water runoff) through piping and other

equipment required to convey recovered liquids to the on-site

leachate management system.

b. cover Svstem The cover system includes the

following components: cover; cover protection; and access and

bench roads. The general objectives of this system are: to

provide a low peirmeabillty layer and the materials required to

support and protect the low permeability layer; and to provide

and maintain access for purposes of construction, and operation

and maintenance.

c. Surface Water Management Svstem The surface

water management system includes drainage pipes and channels;

roadway and bench ditches; retention/siltation basins if

required: and other appurtenances. The general objectives of

this system are to manage surface water run-off generated by

storm events, run-on and irrigation operations.

Third Partial conaent Decree Page 2 3

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3. Imalementation of the Woyk

a. Except as provided in Section VIII (Excluded

Work, page 29), Work Defendants shall be responsible for

furnishing, in accordance with the final gas design package, all

labor, equipment, materials, utilities and support facilities for

the design, construction, operation and maintenance for the Gas

Control, Cover and Surface Water Management Systems, and shall

ensure that all are complete and functional for the term of this

Decree.

b. Work Defendants shall Implement the Work

detailed in this Decree and the Plans as approved or modified by

EPA pursuant to the terms of this Decree. Noncompliance with any

EPA-approved Reports, Plans, specifications, schedules,

appendices, or attachments to the Plans shall be considered a

failure to comply with this Decree and shall subject Work

Defendant(s) to stipulated penalties as provided in Section XXIII

(Stipulated Penalties, page 73).

c. After EPA approval of the Final Construction

As-Built Report, Work Defendants shall specify a start date for

the beginning of a Compliance Testing Period, A Compliance

Testing Plan which describes compliance testing procedures shall

be included in the Final Operations Plan in accordance with

Section 4.0 (Management Plans) of the SOW. Compliance Testing

shall occur during consecutive 90-day periods. A Compliance

Testing Report will be due no later than six (6) weeks after

completion of each 90-day Compliance Testing Period, and shall

describe the extent to which all Performance Standards have been

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d. Compliance Testing shall continue until EPA

notifies work Defendants that two consecutive 90-day periods have

been successfully completed pursuant to Section 5.5 (Compliance

4 I Testing Activities) of the SOW. The Operations and Maintenance

sj Period shall begin retroactively at the beginning of the first of

the two consecutive successful 90-day periods, and shall continue

for a total of three (3) years. A Construction Completion Report

shall be submitted three (3) weeks after EPA notice that the

Compliance Testing Activities have been successfully completed.

e. The Parties currently anticipate that the

Compliance Testing Period will not last longer than twelve (12)

months. If EPA determines that failure to attain compliance is

due to inadequate or untimely implementation of the Work, EPA may

assess stipulated penalties as provided in Section XXIII


f. If, at any time during the Operations and

Maintenance Activities as described in Section 5.6 of the SOW,

the Work Defendants fail to meet any Performance Standard, the

Work Defendants shall submit a Noncompliance Notification within

five (5) days of receipt of the information indicating the

noncompliance event. This Noncompliance Notification shall

describe the noncompliance event as required by Section 5.6 of

the sow. A Compliance Action Plan shall be submitted fifteen

(15) days after receipt of the information indicating the

noncompliance event, and shall describe the corrective action(s)

to be undertaken pursuant to Section 5.6.3 of the SOW with a

schedule for those action(s) .

g. In the event that compliance is not attained

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after Implementation of a Compliance Action Plan, EPA may assess

a stipulated penalty as provided in paragraph XXIII.B.2.a (on

page 78) of Section XXIII (Stipulated Penalties). EPA may assess

a stipulated penalty as provided in paragraph XXIII.B.2.c (on

page 78) of Section XXIII (Stipulated Penalties) for untimely or

inadequate or incomplete implementation of a Compliance Action

Plan(s).

h. In the event that compliance is not attained

after implementation of a Compliance Action Plan, the Work

Defendants shall submit another Compliance Action Plan describing

the additional activities which will be taken to meet all

Performance Standards.

i. All Work shall be performed in accordance

with the National Contingency Plan, EPA guidance, and the

requirements of this Decree, including the standards,

specifications, and schedules established pursuant to this Decree

and its Exhibits.

4. peUvgraMeg

a. As described more fully in the attached SOW,

all Plans, specifications, schedules. Reports and other pertinent

information shall be submitted to EPA in accordance with this

Decree and Exhibit B, including but not limited to, the

following: (l) the Management Plans; (2) the Predesign Report;

(3) the Design Packages; (4) the Construction As-Built Report;

(5) the Construction Completion Report; (6) Noncompliance

Notification Report, if applicable; and (7) the Work completion

Report.

b. Work Defendants shall provide written

Third Partial Consent Decree Page 2 6

ll Progress Reports to EPA. These Progress Reports shall be

2 provided monthly; however, one year after EPA approval of the

3 Construction Completion Report, the Work Defendants may request

4 that the Progress Reports be submitted quarterly. For purposes

5J of these Progress Reports, the "reporting period" shall be one

6 month if the Progress Reports are required monthly, or one

7 quarter if required quarterly. The reporting period for the

8 first Progress Report shall be from the effective date of this

9 Decree to the end of the first full month thereafter. These

10 Progress Reports shall describe all actions taken to comply with

11 this Consent Decree during the reporting period, including a

12 general description of Work and activities commenced or completed

13 during the reporting period. Work and activities projected to be

14 commenced or completed during the next reporting period, and any

15 problems that have been encountered or are anticipated by Work

16 Defendants in commencing or completing the Work. These Progress

17 Reports shall be submitted to EPA by the twenty-first (21st) day

18 of each month if required monthly, or by the twenty-first (21st)

19 day of January, April, July, and October, if required quarterly.

20 The Progress Reports submitted in January, April, July and

21 October shall include a quality assurance Report, which shall

22 contain information which demonstrates that the Work Defendants

23 are complying with the requirements of Section XII (Quality

24 Assurance/Quality Control, page 36) and the QA/QC Plan

2 5 established pursuant to this Decree.

26 c. Subject to the provisions of this Decree, if

27 any deliverable or submitted Progress Report is inadequate or is

28 disapproved by EPA, or if the Work Defendants fail to submit any

Third Partial consent Decree Pago 27

ll deliverable or Progress Report in accordance with the schedule

2 1 set forth in or developed pursuant to this Decree, then the Work

31 Defendants shall be considered to be in violation of this Decree

41 and subject to stipulated penalties as governed by Section XXIII

5 (Stipulated Penalties, page 73).

6 5. Performance Standards

7 Work Defendants shall meet all Performance Standards

8 with respect to the Work at the Site. These standards shall

9 include those clean-up standards, standards of control, and other

10 substantive criteria, requirements or limitations as set forth in

11 this Decree.

12 6. EPA Review

13 a. If EPA disapproves any Work being performed

14 by Work Defendants, the Work Defendants shall have ten (10) days

15 from receipt of such disapproval, or a longer period if deemed

16 appropriate by EPA, to correct the Work.

17 b. If EPA disapproves any plans, reports or

18 other items required to be submitted to EPA for approval pursuant

19 to this Section VII (Work to be Performed), Section XII (Quality

20 Assurance/Quality Control, page 36), or Section XVlli (Escrow

21 Account, page 57), the Work Defendants shall have ten (10) days

22 from receipt of such disapproval, or such longer period as may be

23 allowed by EPA, to correct any inadequacies and resubmit the

24 plan, report or item for EPA approval.

25 c. Any disapprovals by EPA shall Include an

26 explanation of why the Work, plan, report or item is being

27 disapproved.

28 d. The Work Defendants must address each of


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1| EPA's comments and restibmit to EPA the previously disapproved

2 I plan, report or item with any required changes within the

deadline set forth herein.

e. If any Work, or any plan, report, or item is

inadequate or untimely after resubmission, then the Work

Defendants shall be deemed to be in violation of this Decree and

subject to stipulated penalties as governed by Section XXIII


7. Failure tg. Pectprn

In the event EPA or its designee performs all or portions of

the Work pursuant to paragraph XXVI.D (on page 94) of Section

XXVI (Reservation of Rights), the Work Defendants shall reimburse

the EPA for the costs of doing such work, pursuant to the

provisions of paragraphs XVII.E.1 and XVII.E.3 (page 56) of

Section XVII (Reimbursement of Response Costs), plus all

penalties set forth in Section XXIII (Stipulated Penalties, page

73).

VIII. EXCLUDED WORK

A. Definition of Excluded Work

For the purposes of this Decree and its Exhibits, Excluded

Work shall be defined, both individually and collectively, as the

following three (3) items.

1. Cover Protectipn Component of the Cover Svstem for

the North Slope of the South Parcel fNSSPl:

a. The NSSP is defined as the approximately 44

acre area on the South Parcel with boundaries defined pursuant to

281 this Decree and Figure B-1 (Plan Location of the Work) of the

1 SOW. The Cover System for the NSSP is expected to be composed of

2 a combination of impermeable and protective layers which will lie

3J directly above the Gas Collection Component of the Gas Control

4 I System.

^j b. This item of the Excluded Work is the

6 procurement and construction of the Cover Protection Component of

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the Cover System for the NSSP.

c. The person(s) performing this item of

Excluded Work shall use the final design plans and specifications

developed by the Work Defendants pursuant to Section VII (Work to

Be Performed, page 17) and the SOW when procuring and

constructing the Cover Protection Component, unless EPA or the

Court determines otherwise.

d. Tasks and activities not included in this

item of Excluded Work are: the predesign, design, compliance

testing and operations and maintenance of all NSSP Systems, and

the construction of all of the NSSP Systems except for the Cover

Protection Component, which shall be undertaken by the Work

Defendants pursuant to Section VII (Work to be Performed, page

17). Work Defendants shall pay the United States' and the

State's costs incurred in oversight of this item, pursuant to

Section XVII (Reimbursement of Response Costs, page 51).

2. Thermal Destruction Facility

a. The Thermal Destruction Facility (TDF) will

treat the contaminants in the landfill gas stream through thermal

destruction or energy recovery technology.

b. This item of the Excluded Work is: the

predesign, design, and construction of the TDF; and operation.

Third Partial Consent Decree -3>'

Page 2 9 Third Partial Consent Decree

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maintenance and monitoring of the TDF until EPA's approval of the

Work Completion Report.

c. Tasks and activities not included in this

item of Excluded Work include activities described in Section

5.2.3 (Landfill Gas Characterization) of the SOW and construction

of headers and conveyance lines for delivery of landfill gas to

the TDF, which shall be undertaken by the Work Defendants

pursuant to Section VII (Work to be Performed, page 17). Work

Defendants shall provide to the person(s) performing this

Excluded Work information, both ranges and averages, regarding

gas quality, gas coisposition, gas quantity estimates and vacuum

requirements.

d. In the event Work Defendants perform this

item of Excluded Work and utilize an energy recovery system, any

funds generated by such energy recovery system shall be placed in

the Cash Escrow Account.

3. Horth Parcel

a. The Horth Parcel is defined as the 45-acre

portion of the site which lies to the north of Highway 60 (Pomona

Freeway).

b. This item of Excluded Work is: the

predesign, design, construction, compliance testing, and

231 operation, maintenance and monitoring of the North Parcel Gas

24 Control, Cover, and Surface Water Management Systems until EPA

25 approval of the Work Completion Report. North Parcel systems

26 also include conveyance of landfill gas collected from the North

27j Parcel to the TDF and liquids recovered from the North Parcel to

281 the Leachate Management System.


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B. In the event that any or all item(s) of Excluded Work

are performed entirely by person(s) other than Work Defendants,

Work Defendants shall not be responsible for attaining

performance standards for that item(s) of Excluded Work. Nothing

in this paragraph shall be deemed to modify or change Work

Defendants' obligations under the SOW or this Decree, including

the obligation to attain Performance Standards or to comply with

integration and coordination requirements in Section 3.0 of the

SOW.

C. In the event Excluded Work is not performed by any

other person. Work Defendants shall perform any or all item(s) of

Excluded Work or any portion thereof, upon written request by

EPA. EPA shall not request Work Defendants to perform any or all

item(s) of Excluded Work or any portion thereof unless EPA

determines that sufficient funds are available in the Cash Escrow

Account to provide payment to Work Defendants for that item or

portion of Excluded Work pursuant to paragraph VIII.E below.

Work Defendants shall submit an Excluded Work Completion Report

pursuant to Sections 5.8 and 7.9 of the SOW for each item or

portion of Excluded Work performed by them.

D. Except as provided in paragraph XXIII.C.6 (on page 83)

of Section XXIII (Stipulated Penalties) and Section XLII

(Termination and Satisfaction, page 107), if Work Defendants

perform an item(s) or portion of Excluded Work, all references in

this Decree to Work shall be read to apply to that item(s) or

portion of Excluded Work, and Work Defendants shall be

responsible for attaining Performance Standards pertaining to

that item(s) or portion of Excluded Work.

Third Partial Consent Decree -^D

Page 32

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E. In the event Work Defendants perform any or all item(s)

of Excluded Work or any portion thereof. Work Defendants shall be

3 I entitled to payment from the Cash Escrow Account for up to the

4 I first $6 million of work costs incurred by Work Defendants for

each such item of Excluded Work. The value toward completion of

any work which EPA determines has been satisfactorily performed,

or funds provided by any person not a signatory to this Decree

for each item of Excluded Work shall correspondingly reduce the

payment owing from the Cash Escrow Account to Work Defendants for

that item of Excluded Work. The Escrow Agreement shall require

that the Work Defendants provide a statement at the time they

seek reimbursement showing an accurate accounting of work costs

for Excluded Work. The following costs or expenditures of Work

Defendants specifically shall not be included as work costs for

Excluded Work:

1. Any fines or penalties assessed for noncompliance

with (a) the provisions of this Decree, (b) plans, schedules or

specifications relating to the Excluded Work, or (c) federal or

State laws;

2. Work Defendants' internal corporate costs, or OII

Steering Committee administrative and legal fees (as

distinguishable from Work Defendants' oversight, project

management, and legal costs, which are included to the extent

they arise from performance of that item of Excluded Work);

3. Costs associated with the judicial resolution of

any disputes under Section XXII (Dispute Resolution, page 69),

unless Work Defendants prevail in the judicial resolution of the

28 I dispute;

Third Partial Consent Decree __ i i _ ''• *' '

l| 4. Any costs arising out of claims or the defense of

21 claims for personal injury, property damage, or other third party

claims;

5. The costs incurred by EPA resulting from any EPA

determination under paragraph XXIII.C (on page 81) of Section

XXIII (Stipulated Penalties);

6. Any costs which Work Defendants would have been

obligated to incur or pay under the provisions of this Consent

Decree even had they not performed Excluded Work.

F. Nothing contained in the preceding paragraph VIII.E

shall preclude Work Defendants from asserting that such costs and

expenditures, excluding fines or penalties, are response costs

under CERCLA and the NCP.

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IX. ADDITIONAL WORK

A. In the event that EPA or the Work Defendants determine,

before EPA's approval of Work Defendants' Work Completion Report,

that additional response work is necessary to carry out the

activities required by this Decree or to meet the Perfoirmance

Standards, notification of such additional work will be provided

to the Project Coordinator for the other party.

B. Unless another time period is agreed to by EPA and the

Work Defendants, within 30 days of receipt of such notice by EPA

or by Work Defendants that additional work is necessary pursuant

to this Section, the Work Defendants shall submit a revised or

amended Work Plan or Technical Memorandum, as appropriate, to EPA

for such additional work. The revised or amended Plan shall

conform to the requirements in Section VII (Work To Be Performed,

Third Partial Consent Decree -4-1-

Page 34

11 page 17). Work Defendants shall implement the revised or amended

2 I Plan as approved or modified by EPA in accordance with the

3 schedule developed pursuant to this Decree. This paragraph shall

4 not apply to emergency response actions as determined by EPA.

5 C. Any additional work determined to be necessary by Work

6 Defendants is subject to approval by EPA.

7 D. Any additional work determined to be necessary by Work

8 Defendants and approved by EPA, or determined to be necessary by

9 EPA to carry out the Work or to meet the Performance Standards,

10 shall be completed by Work Defendants in accordance with the

11 standards, specifications, and schedules approved by EPA.

12

13 X. PERIODIC REVIEW TO ASSURE PROTECTION OF HUMAN

14 HEALTH AND THE ENVIRONMENT

15 A. In light of the fact that hazardous substances,

16 pollutants or contaminants will remain at the Oil Site, Work

17 Defendants shall conduct the requisite studies and Investigations

18 as determined necessary by EPA in order to permit EPA to conduct

19 five year reviews as required by Section 121 of CERCLA, 42 U.S.C.

20 S 9621, any applicable regulations, and EPA guidance, gtructwr?

21 and Components of Five-vear Reviews, dated May 23, 1991.

22 B. If EPA determines that information received, in whole

2 3 or in part, during its review, indicates that the remedy is not

24 protective of human health and the environment, EPA either may

25 take administrative or judicial action or may perform any

26 additional activities EPA has determined to be necessary. Except

27 as provided in paragraph IX.A of Section IX (Additional Work,

281 page 34), such activities identified in this paragraph X.B shall

Third Partial Consent Decree _ i 3 - ^"'^ ^*

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not be considered to be Work or Excluded Work.

XI. SAFETY, HEALTH AND EMERGENCY RESPONSE PLAN

A. The Worker Health and Safety Plan that the Work

Defendants shall submit pursuant to Section VII (Work to be

Performed, page 17) and Exhibit B of this Consent Decree shall be

prepared in conformance with applicable Occupational safety and

Health Administration and EPA requirements, including but not

limited to OSHA regulations at 29 C.F.R. { 1910.120.

B. The Emergency Response Plan that the Work Defendants

shall submit pursuant to Section VII (Work to be Performed, page

17) and Exhibit B of this Decree shall set forth health, safety

and emergency response procedures for the activities to be

conducted by Wor)t Defendants. At a minimum, the Emergency

Response Plan shall address both workers at the site and public

exposure to releases or spills at and from the Site.

C. The Parties shall use best efforts to coordinate on-

site activity plans.

XII. QOALITY ASSURANCE/QUALITY CONTROL

A. The Quality Assurance/Quality Control (QA/QC) Plan that

the Work Defendants shall submit pursuant to Section Vll (Work to

be Performed, page 17) of this Consent Decree and Exhibit B

shall, where applicable, be prepared in accordance with EPA

guidance. Interim Guidelines and Specifications for Preparing

Qualitv Assurance Project Plans. QAMS-005/80, and relevant EPA

guidance. The QA/QC Plan shall include procedures necessary for

the Implementation of the Work and shall address Construction

Third Partial Consent Daarae -4-4- Page 3 6

1 Quality Assurance procedures in accordance with EPA guidance,

2 construction Oualitv Assurance for Hazardous Waste Land Disposal

3 Facilities. EPA/530-SW-86-031. The QA/QC Plan shall include a

4 description of the procedures used to verify that the processes

5 are operating within acceptable limits. Upon approval by EPA to

6 the Work Defendants, the Work Defendants shall implement the

7 Plan.

8 B. The Work Defendants shall use QA/QC procedures in

9 accordance with the QA/QC Plans submitted pursuant to this

10 Decree, and shall utilize standard EPA chain of custody

11 procedures, as documented in the National Enforcement

12 Investigations Center Policies and Procedures Manual as revised

13 in May 1986, and the National Enlf9rceinent Invegtiqatjipng Center

14 Manual for the Evidence Audit, published in September 1981, for

15 all sample collection and analysis activities, unless other

16 procedures are approved by EPA. In order to provide quality

17 assurance and maintain quality control regarding all samples

•8 collected pursuant to this Decree, the Work Defendants shall, at

.9 a minimum, ensure that the following QA/QC measures are employed

!0 at laboratories utilized for analysis:

11 1. Work Defendants shall assure that all laboratories

:2 utilized by the Work Defendants for analysis of samples taken

;3 pursuant to this Consent Decree shall provide for access of EPA

14 personnel and EPA authorized representatives to assure the

15 accuracy of laboratory results related to the OII Site.

:6 2. Any laboratory utilized by the Work Defendants for

:7 analysis of samples taken pursuant to this Consent Decree shall

:8 perform all analyses according to EPA methods or methods deemed

Third Partial Consent Decree _ . r , P»5o 37

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1 satisfactory to EPA and submit all protocols to be used for

2 analysis to EPA in the Plans and documents required under this

Consent Decree.

3. All laboratories utilized by the Nork Defendants

for analysis of samples taken pursuant to this Decree shall

participate in an EPA or EPA equivalent QA/QC program. As part

of the QA/QC program and upon request by EPA, such laboratories

shall perform, at no expense to Plaintiffs, analyses of samples

provided by EPA to demonstrate the quality of each laboratory's

data.

XIII. PROJECT COORDINATORS

A. By the effective date of this Consent Decree, EPA, the

State and the Work Defendants shall each designate a Project

15 Coordinator to monitor the progress of the Work, to assure

16 integration and coordination of the Work and Excluded Work, to

facilitate communication among the Parties, and to oversee the

implementation of this Consent Decree. EPA may also designate an

Alternate Project Coordinator. EPA, the State and the Work

Defendants each have the right to change their respective Project

Coordinator. Such a change shall be accomplished by notifying

the other Parties in writing at least seven (7) calendar days

prior to the change. To the maximum extent possible,

communications between the Work Defendants, EPA and the State and

all documents, including Reports, approvals, and other

correspondence concerning the activities performed pursuant to

the terms and conditions of this Consent Decree, shall be

directed through the Project Coordinators. The role of the State

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Third Partial Consent Decree - A . U - Page 38

Project Coordinator shall be consistent with the provisions of

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paragraphs XXXV.A and XXXV.D of Section XXXV (State and Local

Agency Participation, page 103), and EPA shall be the lead agency

(as defined In the NCP).

B. The EPA Project Coordinator shall have the authority

vested in the On-Scene Coordinator by 40 C.F.R. Part 300 as well

as the authority to ensure that the Work is performed in

accordance with all applicable statutes, regulations, and this

Consent Decree. If the EPA On-Scene-Coordinator and the EPA

Project Coordinator are two different individuals, EPA will make

its best efforts to coordinate any direction given to the Work

Defendants by the On-Scene-Coordinator and the EPA Project

Coordinator.

C. The EPA Project Coordinator or On-Scene-Coordinator

shall also have the authority to require a cessation of the

performance of the Work or any other activity at the site that

s/he determines may present or contribute to an endangerment to

public health, welfare, or the environment or cause or threaten

to cause the release of Waste Materials from the Site. The ab

sence of the EPA Project Coordinator from the Site shall not be

cause for stoppage of work.

D. In the event the EPA Project Coordinator or On-Scene-

Coordinator takes any action which results in the delay of the

Work or any other activity required by this Decree, the Parties

may, if necessary, extend the compliance schedule of this Decree

26 for only that amount of time which EPA determines is necessitated

27 1 by the event. Should the Work Defendants desire to extend the

2 e \ compliance schedule pursuant to this Section, the Work Defendants

Third Partial Consent Decree _4_'}. - ^"'o 39

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shall propose an extension and the EPA shall determine the length

of any extension. If the EPA Project Coordinator takes any

action which results in the delay of the Work or any other

activity required by this Decree for any of the reasons set forth

in the preceding paragraph XIII.C and those reasons are due to

the acts or omissions of the Work Defendants or the

Contractor(s), then any extension of the compliance schedule

shall be at EPA's discretion.

E. The Work Defendants' Project Coordinator shall be

responsible for directing the daily activities of the Work

Defendants and Work Defendants' contractors in the performance of

the Work. With advance notice to EPA, the Work Defendants'

Project Coordinator may assign other representatives, including

other contractors, to serve as a site representative for

oversight of performance of daily operations during remedial

activities.

F. The Work Defendants' Project Coordinator and the EPA

Project Coordinator shall also coordinate with the Project

Coordinators for the Work Defendants and for the EPA under the

First Decree and any Excluded Work Project Coordinator(s), and

shall include those Project Coordinators in all notices and

communications required by this Decree.

G. Prior to invoking formal Dispute Resolution procedures,

any unresolved disputes arising between the EPA site representa

tive and the Work Defendants or their contractors shall be

referred to the EPA and Work Defendants' Project Coordinators.

Third Partial Consent Decree - A ^ -

Page 40

- ... *;

1 I XIV. ACCESS

2 A. To the extent that the Site or any other area where

3 Work is to be performed is owned or controlled by persons other

4 than those bound by this Consent Decree or to the extent that ac-

5 cess to or easements over property is required for the proper and

6 complete performance of this Decree, the Work Defendants shall

7 use their best efforts to obtain access agreements from the

8 present owners or those persons who have control over the

91 property, including lessees, no later than sixty (60) days in

10j advance of the need for such access. Access agreements shall

111 provide access to the Work Defendants, the Contractor(s), the

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United States on behalf of EPA and USAGE, and the State and local

agencies, and their authorized representatives. In the event

that access agreements are not obtained within the sixty (60) day

period, the Work Defendants shall notify EPA within five working

days thereafter regarding both the lack of, and efforts to

obtain, such agreements. If Work Defendants fail to gain access

within 60 days, they shall continue to use best efforts to obtain

access. For purposes of this paragraph, "best efforts" includes

but is not limited to the payment ot reasonable sums of money as

consideration for access.

B. The United States may, as it deems appropriate, assist

Wgrk Defendants in obtaining access. Work Defendants shall

reimburse the United States in accordance with the procedures in

Section XVII (Reimbursement of Response Costs, page 51), for all

costs incurred by the United States, including, but not limited

to, attorneys fees and the amount of just compensation in

28 I obtaining access.

Third Partial consent Decree -4 -9 -Page 41

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C. If the Plaintiffs and the Work Defendants, through

continued joint or individual efforts, are unable to obtain

access pursuant to paragraph XIV.A of this Section, or suitable

alternative access, a force majeure event shall be deemed to have

occurred, and the affected work shall be modified, if necessary,

by mutual agreement of the Work Defendants and Plaintiffs, to

take into account the lack of such access.

D. 1. The EPA, the USAGE, and their representatives,

including contractors, reserve all rights under Section 104 of

CERCLA and, during the effective period of this Decree, shall

have access at all times to the Site and during reasonable times

with reasonable notice, to any contiguous property owned or

controlled by any Defendant, for activities, including but not

limited to:

a. Monitoring the progress of activities taking

place;

to EPA;

b. Verifying any data or information submitted

c. Conducting investigations relating to

contamination at and near the Site;

d. Obtaining samples at the Site.

2. As to activities relating to the Site, the EPA,

the USAGE, the State, and their representatives shall also have

access for the purposes of inspecting and copying records,

operating logs, contracts, or other documents as specified in

Section XV (Data Exchange: Sampling and Analysis, page 43).

E. To the extent that EPA has control over access to

portions of the OII Site, and in light of the fact that EPA

Third Partial Consent Decree - 5 0 -

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1D intends to continue to provide Site security and to control

2J access to portions of the Site, EPA agrees to provide reasonable

3 1 access to those necessary personnel of Work Defendants required

4! to carry out the field work detailed in this Consent Decree.

51 Within seven (7) days of the effective date of this Consent

el Decree, Work Defendants shall provide the EPA Project Coordinator

7 with a list of necessary personnel and their company

affiliations, to be added to the list of persons who shall be

provided access to the Site. This list can be amended as

necessary.

F. Any person obtaining access to the Site pursuant to

this provision shall comply with all applicable provisions ot the

Safety, Health and Emergency Response Plan as submitted pursuant

to Section XI (Safety, Health and Emergency Response Plan, page

36), and Exhibit B of this Consent Decree.

ZV. DATA EXCUANOE: SAMPLING AND AMALYSIS

A. Defendants shall provide EPA with all technical data

and/or information generated by the Defendants with respect to

the implementation of this consent Decree, and shall provide

technical data and/or Information relating to environmental

conditions, public health issues. Site conditions. Site use and

history, contaminant incidence and migration, and regional

environmental conditions relating to the performance of the Work

and the Excluded Work or which would be covered by the provisions

of Section 104 of CERCLA, as such data and information become

available. Summaries and tabulations of laboratory data may be

reviewed for clerical and gross laboratory handling errors prior


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to submission pursuant to this paragraph. The data and

information to be provided to EPA under this paragraph include,

but are not limited to:

1. Communications between Defendants and local, state

or other Federal authorities:

2. Permits from local, state or Federal authorities;

3. Raw analytical, monitoring, sampling, geographi

cal, hydrogeological, geologic, meteorological, surface water,

seismic, landfill gas, subsurface gas, or ambient air data,

resulting from any environmental testing relating to the OII

Site, including documentation of all related Quality Assurance-

/Quality Control (QA/QC) results;

4. Technical working drafts and final reports, letter

reports, work plans, documents, records, files, memoranda, status

reports, chain of custody records, manifests, trucking logs,

receipts, sample traffic routing, correspondence, or other

documents or information related to the Work, and written

material developed using data generated by the Work Defendants as

part of the implementation of this Decree or generated by

Plaintiffs relating to the OII Site;

5. Technical maps, computer generated graphics,

charts, tables, data sheets, geologic cross-sections, lithologic

logs, graphs, photographs, slides, or other such graphic material

relating to the Oil Site; and

6. Computerized technical data and information,

including any creation, display and organization of a data base.

B. Subject to paragraph XV.H of this Section, Work

28 I Defendants shall make available any relevant data and/or

Third Partial Consent Decree -'5X-

Page 44

1 information covered by paragraph XV.A to any person(s) performing |

2 Excluded Work. The costs of copying such data and/or information

3 shall be borne by the person(s) performing Excluded Work who

4 makes such request. I

5 C. Plaintiffs agree to provide Work Defendants with

6 technical data and Information relating to envlroiunental and

7 public health issues. Site conditions. Site use and history, and

8 regional environmental conditions relating to the OII Site as

9 such data become available, including but not limited to the

10 information set forth in subparagraphs XV.A.3, XV.A.4, XV.A.5,

11 and XV.A.6 of this Section.

12 D. under the provisions of Section 104(e) of CERCLA, EPA

13 and the State explicitly reserve the right to observe the Work of

14 the Work Defendants as it is performed. In addition, at the

15 request of EPA, the Work Defendants shall allow split or

16 replicate samples to be taken by EPA or the State and/or their

17 authorized representatives, of any samples collected by the Work

18 Defendants or anyone acting on the Work Defendants' behalf

19 1 pursuant to the Implementation of this Consent Decree. To the

201 extent practicable, any such observation and sample collection

21 shall be coordinated through the EPA Project Coordinator. At the

22 request of Work Defendants, Plaintiffs and/or their authorized

23 representatives shall allow Work Defendants to split or replicate

24 any samples collected by Plaintiffs and/or their authorized

25 representatives.

26 E. The Parties performing sampling for the purposes of

27 this Decree shall notify the other Parties, except Cash

28 Defendants, as soon as possible but no less than seven (7) days


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in advance of any sample collection activity, and the Party

desiring to take split or replicate samples shall inform the

other at least three (3) days prior to the scheduled sampling

event. The Party performing the siuspling activity shall Inform

the other Parties, except Cash Defendants, at least twenty-four

(24) hours in advance if the planned sampling schedule cannot be

met, or of changes to any sample collection activity.

Notwithstanding the foregoing, within seven (7) days after the

approval of any sampling plan (including the schedule for

Implementation), Nork Defendants shall notify EPA of the intended

date of commencement of the sampling activity. Work Defendants

shall notify EPA 30 days prior to the disposal of any such

samples, and shall provide EPA with an opportunity to take

possession of all or a portion of such samples.

F. Work Defendants need not provide EPA with seven (7)

days' notice of routine sampling performed pursuant to the SOW;

however, Work Defendants shall provide EPA with a schedule for

all routine sampling. Work Defendants shall notify EPA seven (7)

days in advance of any changes in the routine sampling schedule.

Work Defendants need not provide EPA with eKlvance notice of

changes in routine sampling as a result of unexpected conditions.

Work Defendants shall, however, notify EPA within forty-eight

(48) hours of such occurrence and shall provide EPA with the

results of analysis of such sampling when the results become

available.

G. The Parties shall notify each other in a timely manner

of any project which is likely to produce data or information of

the types described in this Section.

Third Partial Consent Dacrea .c^.. Page 46

H. Defendants recognize that the data and reports

generated under this Consent Decree are not subject to the

protection of Section 1905 of Title 18 and 40 C.F.R. Part 2 as

confidential Information. Moreover, the Parties explicitly

recognize that the provisions of Section 104(e)(7)(F) of CERCLA

apply to data and information generated by the Defendants. The

Work Defendants shall not assert a claim of confidentiality

regarding any hydrogeological or chemical data, or any data

relating to the Work. Defendants reserve their rights to assert

a confidentiality claim tor all other Information pursuant to

Section 1905, Title 18 and 40 C.F.R. Part 2, and any applicable

state laws and regulations. The provisions of this Section shall

not constitute a waiver of any applicable claims of attorney work

product or attorney-client privilege. The United States, EPA and

the State reserve their rights with regard to information

otherwise not subject to disclosure under applicable law. The

State is not obligated to provide any materials pursuant to this

Section which are subject to applicable attorney work product

claims, attorney-client privilege, or which the State is not

required to disclose under California Government Code Section

6254, except that Section 6254(b) shall not apply to the extent

that the State has made requested materials available to parties

to any pending litigation.

I. All data, factual information, and documents submitted

by the Defendants to EPA and the State pursuant to this Consent

Decree, and determined by EPA or the State, as appropriate, not

to be confidential, shall be subject to public inspection.

J. Work Defendants shall develop and implement a data

Third Partial Consent Decree ^ Page 47

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Management Information System (MIS) pursuant to this Decree and

Exhibit B.

K. If any of the Cash Defendants wish to perform any

sampling activity on or contiguous to the Site, they shall first

provide notice to the Project Coordinators and obtain permission

from EPA and the contiguous property owner if such owner is a

Defendant. In such an event, the provisions of this Section

shall apply to that Cash Defendant.

L. Subject to paragraph XV.K above, any Cash Defendant

shall, at its request in writing, have access to all data,

factual Information and documentation generated under this Decree

or described in Section VII (Work To Be Performed, page 17) and

the Scope of Work. The cost of copying shall be borne by the

Cash Defendant. Any such data, factual information or documents

obtained by any Cash Defendant shall be subject to the provisions

of this Section.

XVI. RETENTION OF RECORDS

A. Each Defendant shall preserve and retain all records

and documents now in its possession or control or which come into

the possession or control of Defendants or their divisions,

subsidiaries, or parent corporations and their employees, agents,

accountants, contractors or attorneys that relate to the

performance of the Work or the Excluded Work or that fall within

the scope of Section 104(e) of CERCLA, 42 U.S.C. S 9604(e),

regardless of any corporate document retention policy to the

contrary, during the pendericy of this Decree and for ten (10)

years after termination of this Decree.

Third Partial Consent Decree -Sic-

Page 48

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B. Each Defendant shall preserve and shall instruct all

contractors, subcontractors and anyone else acting on Defendants'

behalf at the OII Site to preserve (in the form of originals or

exact copies, or in the alternative, microfiche or similar

technology of all originals) all documents, records, and

information specified above, during the pendency of this Decree

and for ten (10) years after the termination of this Decree. At

the conclusion of this document retention period. Defendant(s)

shall notify the United States, EPA, and the State at least

ninety (90) days prior to the destruction of any such records or

documents, and, upon request by the United States, EPA, or the

State made within forty-five (45) days of such notice, the

Defendant(s) proposing such destruction shall deliver or make

available any such records or documents to EPA or the State, as

appropriate. Defendants are not obligated to provide any

materials pursuant to this Section which are subject to

applicable attorney work product claims or attorney-client

privilege, or both. In addition, the United States reserves all

its rights with regard to information otherwise not subject to

disclosure under applicable law.

C. EPA shall preserve and retain all records and documents

now in its possession or control or in the possession or control

of its divisions, employees, agents, accountants, contractors or

attorneys which relate to any field activities at the Site

performed by EPA, which are received under the provisions of

Section 104 of CERCLA, or which relate to the performance of the

Work or the Excluded Work under this Decree, as required by the

EPA Office of Information Resources Management Document Number

Third Partial conaent Decree Page 49

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2160, entitled Records Management Manual and the corresponding

EPA Records Management Manual, Appendix B, Records Control

Schedule.

D. The State shall preserve and retain all records and

documents now in its possession or control or in the possession

or control of its divisions, employees, agents, accountants,

contractors or attorneys which relate to the performance of the

Work or the Excluded Work under this Decree or which relate to

activities performed or investigations, or enforcement actions

taken by the State at the OII Site regardless of any documents

retention policy to the contrary, during the pendency of this

Decree and for ten (10) years after its termination. After such

ten (10) year period, the State shall notify the Work Defendants

at least ninety (90) calendar days prior to the destruction of

any such documents. Upon request by any Defendant made within

forty-five (45) days of such notice, tha State shall deliver or

make available to the requesting Defendant originals or copies of

any such records prior to their destruction. The State is not

obligated to provide any materials pursuant to this Section which

are subject to applicable attorney work product claims, attorney-

client privilege, or which the State is not required to disclose

under California Government Code Section 6254, except that

Section 6254(b) shall not apply to the extent that the state has

made requested materials available to parties to any pending

litigation.

E. Each Defendant hereby affirms, individually, that

Defendant has not willfully, recklessly or with gross negligence

altered, mutilated, discarded, destroyed or otherwise disposed of

Third Partial Consent Decree Page SO

1 any records, documents, or other information relating to any

2 party's potential liability with regard to the Site since the

3 notification of that Defendant's potential liability by the

4 United States or the State, or the date of lodging of this

5 Decree, whichever is earliest.

ej F- The failure of any Defendant(s) to preserve and retain

7 1 all records and documents as required by this Section shall

81 subject each such Defendant to the stipulated penalties set forth

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in Section XXIII (Stipulated Penalties, page 73).

G. This Section shall not apply to exact duplicates.

ZVII. REIMBURSEMENT OF RESPONSE COSTS

A. United States' Past Response Costs

1. Defendants agree to reimburse the Hazardous

Substance Superfund for certain response costs that have been

incurred by the United States in responding to the conditions at

the OII Site.

2. EPA will provide Defendants with a copy of the EPA

Cost Documentation Management System (CDMS) documentation that

provides an accounting of its costs for the period from June 1,

1988 up to and including December 31, 1990, and includes an

accounting of its indirect and interest cost calculations for

this period.

3. The Department of Justice will provide Defendants

with a copy of the appropriate Department of Justice

documentation that provides for an accounting of its costs for

the period from June 1, 1988 up to and including December 31,

1990.

Third partial Consent Dacrea •5"?-

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4. Each Cash Defendant listed in Exhibit C shall make

payments in the amounts and in the manner set forth in Exhibit C

to this Decree. Unless otherwise specified in Exhibit C,

payment shall be due within thirty (30) days of notice of entry

of this Decree.

5. Within thirty (30) days of notice of entry of this

Decree, Work Defendants shall pay into the EPA Hazardous

Substance Superfund sufficient funds to guarantee reimbursement

of the United States' Past Response Costs up to $18 million,

subject to the provisions of paragraph XVII.A.6, below.

6. The Parties agree that the first $8 million

received pursuant to paragraph XVII.A.4, above, from Cash

Defendants who were also signatories to the First Decree or the

Second Decree shall be applied to offset Work Defendants' $18

million guarantee for payment of the United States' Past Response

Costs. In the event the recovery from those Cash Defendants

exceeds $8 million, fifty percent (50%) of such funds in excess

of $8 million will be applied to offset the Work Defendants'

guarantee for payment of the United States' Past Response Costs;

the other fifty percent (50t) of such excess shall not be applied

to that guarantee. Neither payments from other person(s) who

were not signatories to the First Decree or the Second Decree,

nor any other funds placed into the Cash Escrow Account shall be

applied to offset the Work Defendants' guarantee of the United

States' Past Response Costs.

7. Payment of the costs set forth in the

documentation submitted by EPA and the Department of Justice

pursuant to paragraphs XVII.A.2 and XVII.A.3 above shall be made

Third Partial consent Decree Page S3 -(,0-

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by certified check(s) within thirty (30) days of notice of entry

of the Consent Decree. Payments to the EPA Hazardous Superfund

shall be made payable to "EPA Hazardous Superfund" and shall

reference the "Operating Industries, Inc. Superfund site." The

certified check(s) shall be mailed to:

U.S. Environmental Protection Agency, Region IX ATTENTION: Superfund Accounting P.O. Box 360863M Pittsburgh, PA 15251

A copy of all transmittal letters and a copy of all checks shall

be sent to the EPA and the Department of Justice as provided in

Section XXVII (Form of Notice, page 97).

B. State Past Response Costs

1. Defendants agree to reimburse the State of

California Hazardous Substance Account for certain past response

costs that have been Incurred by the State in responding to

conditions at the OII Site.

2. The State will provide Defendants with an

accounting of its costs for the period from June 1, 1988 up to

and including December 31, 1990.

3. Defendants shall make payments by certified check

in the amounts set forth in Exhibits C and D to this Decree,

within thirty (30) days of notice of entry of this Decree. The

check(s) shall be made payable to the California Department of

Toxic Substances Control, and shall reference the "Operating

Industries Superfund Site." Defendants shall forward the

certified check(s) to:

Third Partial Consent Decree -(o(-

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California Department of Toxic Substances Control Attn: Accounting/Cashier P.O. Box 806 Sacramento, CA 95812-0806

4. A copy of the transmittal letter and a copy of the

check shall be sent to the State Project Coordinator, as provided

by Section XXVII (Form of Notice, page 9 7 ) .

C. United States' Future Oversight Costs

1. Nork Defendants shall reimburse EPA's Hazardous

Substance Superfund for the oversight costs incurred by the

United States under this Decree for Work, as well as the costs

incurred by the United States in oversight of the activities

performed pursuant to paragraph VIII.A.l (Cover Protection

Component of the Cover System for the North Slope of the South

Parcel, on page 29) of Section VIII (Excluded Work). EPA will

provide Work Defendants with a copy of the EPA Cost Documentation

Management System (CDMS) documentation that provides an

accounting of such costs. These oversight costs shall be paid by j

certified check within thirty (30) days of receipt of the CDMS

documentation. Nork Defendants shall pay the first $16 million

.of such costs and all such costs over $21 million. The United

States will bill for oversight on a periodic basis, no more

frequently than annually. Nothing in this paragraph shall affect

EPA's right to reimbursement of its oversight costs from any

other person not a signatory to this Decree.

2. The check(s) shall be made payable to "EPA

Hazardous Substance Superfund," and shall reference the

"Operating Industries, Inc. Superfund Site." Work Defendants

shall forward the certified check(s) to:

Third Partial Consent Decree Page S4

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U.S. Environmental Protection Agency, Region IX ATTENTION: Superfund Accounting P. O. Box 360B63M Pittsburgh, PA 15251

3. A copy of all transmittal letters and a copy of

all checks shall be sent to the EPA and the Department of Justice

as provided in Section XXVII (Form of Notice, page 97).

D. State's Future Oversight Costs

1. Work Defendants shall reimburse the State and the

California Hazardous Substance Account for the oversight costs

incurred by them under this Decree for Work, as well as the costs

incurred by the State in oversight of the activities performed

pursuant to paragraph VIII.A.l (Cover Protection Component of the

Cover System for the North Slope of the South Parcel, on page

29), of Section VIII (Excluded Work). The State will provide

Work Defendants with an accounting of its costs. These oversight

costs shall be paid by certified check within thirty (30) days of

receipt of the accounting documentation. Work Defendants shall

pay the first $540,000 of such costs and all such costs over

$740,000. The State will bill for oversight on a periodic basis,

no more frequently than annually. Nothing in this paragraph

shall affect the State's right to reimbursement of its oversight

costs from any other person not a signatory to this Decree.

2. The check(s) shall be made payable to the

California Department of Toxic Substances Control, and shall

reference the "Operating Industries, Inc. Superfund Site." Work

Defendants shall forward the certified check(s) to:

Third Partial Consent Decree -tot>- Page 55

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California Department of Toxic Substances Control Attn: Accounting/Cashier P.O. Box 806 Sacramento, CA 95812-0806

3. A copy of the transmittal letter and a copy of the

check shall be sent to the State Project Coordinator, as provided

by Section XXVII (Foril of Notice, page 97).

E. Future costs of Work or Excluded Work

1. The Work Defendants shall reimburse EPA's

Hazardous Substance Superfund or the State for the costs incurred

for any activities outlined in paragraph VII.C.7 (on page 29) of

Section VII (Work To Be Performed) pursuant to the provisions of

paragraph XXVI.D (on page 94) of Section XXVI (Reservation of

Rights). The Work Defendants shall, within thirty (30) days of

receipt of demand for payment, remit a check for the amount of

these costs made payable to the Hazardous Substance Superfund or

the Department of Toxic Substances Control, as appropriate.

2. For each item of Excluded Work as described in

paragraphs VIII.A.l, VIII.A.2, and VIII.A.3 of Section VIII

(Excluded Work, page 29), the Work Defendants shall pay all costs

over $6 million incurred for each such item performed by Work

Defendants, EPA, the USAGE, or the State, or by contractors for

any of them, pursuant to the provisions of that Section. The

Work Defendants shall remit payment by certified check within

thirty (30) days of receipt of demand for payment. Payment shall

be made, as directed by EPA, to the Cash Escrow Account, EPA's

Hazardous Substance Superfund, or the State.

3. Reimbursement shall also be required in the event

that EPA determines that (1) Work Defendants have failed to-

Third Partial Consent Decree - L , ^ -

Page 56

1 perform any material portion of the Work; (2) Work Defendants

2 have performed any portion of the Work in a substantially

3 inadequate or substantially untimely manner; (3) there is an

4 imminent and substantial endangerment to the public health or

5 welfare or the environment resulting from the performance of Work

6 by the Work Defendants; or (4) there is an imminent and

7 substantial endangerment to the public health or welfare of the

8 environment resulting from the failure to perform Work by the

9 Work Defendants, and EPA or its designee, including the State,

10 incurs costs due to the assumption of Work. If EPA or its

11 designee assumes performance of any portion of the Work based on

12 such a determination, the Work Defendants shall, within thirty

13 (30) days of receipt of demand for payment, remit a check for the

14 demanded amount of these costs made payable to the EPA Hazardous

15 Substance Superfund or the DTSC, as appropriate.

16 F. Any payment made pursuant to this Section shall not

17 constitute an admission by Defendants of any liability to EPA,

18 the State, or any other person or agency.

19 G. Each Cash Defendant's monetary obligation under this

20 Decree shall be limited to the amounts set forth in Exhibit C,

21 except as otherwise provided in this Decree.

22

23 XVIII. ESCROW ACCOUNT

24 A. Work Defendants shall establish the "OII Third Partial

25 Consent Decree Escrow Account" no later than ten (10) working

26 days after the effective date of this Decree. The Escrow Account

27 shall have one interest bearing account titled "Work" and one

281 interest bearing account titled "Cash," and these accounts shall

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be segregated from each other.

B. A copy of the Escrow Agreement establishing the Escrow

Account shall be sent to EPA and the State as soon as possible

thereafter for approval primarily to ensure that the escrowed

funds will be handled as set forth by this Decree. Neither EPA

nor the State, through its approval of the terms of the Escrow

Account, guarantees the sufficiency of the Escrow Account

established by this Section.

C. Work Defendants shall deposit $1 million into the Work

Escrow Account within 30 days of notice of entry of this Decree.

The Escrow Agreement shall instruct and authorize the Escrow

Manager to disburse the money in the Work Escrow Account for the

following:

1. To pay the Work Defendants' contractor(s) for the

Work, including the Excluded work if performed by Work

Defendants; and

2. To pay for other expenses, including any incurred

penalties, required to be paid by the Work Defendants pursuant to

this Decree and Exhibits hereto.

D. The Escrow Agreement shall Instruct and authorize the

Escrow Manager to use the money in the Cash Escrow Account for

the purposes and in the amounts requested by EPA. The purposes

include the following: reimbursement of EPA future response

costs; Future Oversight Costs not paid by Work Defendants under

paragraph XVII.C (on page 54) of Section XVII (Reimbursement of

Response Costs); Past Response Costs; Excluded Work; or the costs

of Excluded Work pursuant to Section VIII (Excluded Work, page

29). In the event funds are released from the Cash Escrow

Third Partial consent Dacrea _. . _ Page 58

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1 Account to Work Defendants for Excluded Work, such expenditures

2 shall be subject to the requirements and expenditure limitations

set forth in paragraph VIII.E of Section VIII (Excluded Work,

page 29) .

E. Money received from the Cash Defendants pursuant to

paragraph XVII.A of Section XVII (Reimbursement of Response

Costs, page 51) shall be deposited into the Cash Escrow Account

1 if directed by Exhibit C. Other funds received pursuant to EPA's

direction or from EPA, if any, may be placed into the Cash Escrow

Account.

F. Interest received on each account in the Escrow Account

shall be paid into the account on which it was received and may

be used first to pay for the account fees thereon, and then shall

be used in the same manner and for the same purposes as the other

funds in the account.

G. Payment of money by Defendants to the Escrow Account is

not a fine, penalty or monetary sanction.

H. The Escrow Agreement shall require that the Escrow

Manager prepare and submit to the Work Defendants monthly

statements on money received and disbursed in the prior thirty

(30) days for both the Nork Escrow Account and the Cash Escrow

Account, and the balances in the accounts as of the date of the

statements. A copy of this monthly statement shall be sent

promptly to EPA and the State. In addition, within sixty (60)

days after the establishment of the Escrow Account, and every

ninety (90) days thereafter, in conjunction with the issuance of

the most recent monthly statement by the Escrow Manager, the Work

28 1 Defendants shall submit a financial report to EPA and the State.


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1 The financial report shall include cash flow projections for the

2 amount of money estimated to be necessary for the Work Escrow

3 Account expenses described in paragraph XVIII.C above, for the

4 following ninety (90) day period. If the amount of money in the

5 Work Escrow Account is less than the amount projected by the Work

Defendants' report to be needed for the following ninety (90)

days. Work Defendants shall deposit in the Work Escrow Account,

within thirty (30) days, sufficient money to bring the level of

the Work Escrow Account up to the amount projected to be needed

for the following ninety (90) days.

I. Work Defendants shall submit an annual report to EPA

and the State which shall include a summary of money received and

disbursed in the preceding twelve (12) month period, for each

Escrow Account. This financial report also shall identify all

disbursements which the Work Defendants assert apply against the

funding limitations in paragraphs XVII.C (United States' Future

Oversight Costs, on page 54) and XVII.D (State's Future Oversight

Costs, on page 55) of Section XVII (Reimbursement of Response

Costs).

J. Upon termination of the terms of this Decree pursuant

to Section XLII (Termination and Satisfaction, page 107) , any

funds which remain in the Cash Escrow Account shall be paid into

the "EPA Hazardous Substance Superfund." Any funds which remain

in the Work Escrow Account shall be distributed as directed by

the Work Defendants.

K. Work Defendants shall collect when due and shall

deposit to the Cash Escrow Account upon receipt, all funds owing

to Work Defendants for costs of Work, Excluded Work, Past

Third Partial Cooaant Decree - i f f - Page eo

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Response Costs, and Future Oversight Costs, from the settlement

in the proceedings in bankruptcy for Smith Tool. For any other

bankruptcy settlement entered during the term of this Decree in

which the United States has tiled a claim and for which a

settlement is reached between the United States and the person in

bankruptcy that provides for payments to be made to the Work

Defendants for reimbursement for costs of Work, Excluded Work,

Past Response Costs or Future Oversight Costs, Work Defendants

shall collect when due and shall deposit such payments in the

Cash Escrow Account upon receipt. These funds shall be used as

requested by EPA and shall not be credited to Work Defendants for

purposes of Work Defendants* funding limitations for Future

Oversight Costs nOr Work Defendants' guarantee for the United

States' Past Response Costs.

ZIX. PRIORITY OF CLAIMS

The Defendants' claims against any other party for

contribution or indemnification of all or a portion of the cost

of their settlement herein shall be subordinate to any claim of

the United States against such other party relating to the OII

Site as to any unreimbursed costs for the response actions taken

or other costs incurred by the United States related to the Site,

as provided for by Section 113(f)(3)(C) of CERCLA, 42 U.S.C.

S 9613(f)(3)(C). The United States shall have priority over the

Defendants in the collection ot any judgment obtained against any

non-settling party. Defendants shall notify EPA of any

contribution or indemnification action with regard to the Site.

Third Partial Consent Decree •u ' » -

Page 61

1 XX. IMDEMMIFICATIOH AMD INBURAMCB

2 A. The United States, EPA or other government agencies or

3 departments do not assume any liability by entering into this

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Consent Decree. Work Defendants shall indemnify, save and hold

harmless the United States on behalf of EPA, USAGE, and the U.S.

Coast Guard, and the State on behalf of DTSC and the California

Hazardous Substance Account, and their agencies, departments,

officials, agents, employees, contractors, subcontractors, and

representatives from any and all claims or causes of action or

costs including, but not limited to, attorney's fees and other

expenses of litigation and settlement arising from, or on account

of, acts or omissions of Work Defendants, their agents,

successors, assigns, contractors, subcontractors, or any persons

acting on their behalf or under their control, in carrying out

any activities pursuant to the terms of this Consent Decree.

This indemnification does not extend to that portion of any such

claim or cause of action attributable to the negligent, wanton,

or willful acts or omissions of the United States with respect to

EPA, USAGE, or the U.S. Coast Guard, or the State or their

contractors, subcontractors, or any other person acting on their

behalf In carrying out activities at the Site. The United States

and the State shall notify Work Defendants of any such claim or

action within thirty (30) days of receiving notice that such a

claim or action has been filed. The Work Defendants have the

right to seek intervention under Section 113(i) of CERCLA, Rule

24 of the Federal Rules of Civil Procedure, and California Code

27 of Civil Procedure S 387.

28 B. The United States, EPA, USAGE, the State, and the Cash

Third Partial Consent Decree -T-O- Page «2

Defendants are not, and shall not be held out as, parties to any

contract entered into by or on behalf of Work Defendants in

carrying out activities pursuant to this Consent Decree. Neither

Work Defendants nor any such contractor shall be considered an

agent of the United States, EPA or the state.

C. Defendants waive all claims against the United States

and the State for damages or reimbursement or for setoff of any

81 payments made or to be made to the United States or the state,

91 arising from or on account of any contract, agreement, or

arrangement between any one or more of the Defendants and any

person for performance of Work on or relating to the Site,

including, but not limited to, claims on account of construction

delays. In addition. Defendants shall indemnify and hold

hairmless the United States and the State with respect to any and

all claims for damages or reimbursement arising from or on

account of any contract, agreement, or arrangement between any

one or more of Defendants and any person for performance of Work

on or relating to the Site, including but not limited to claims

on account of construction delays.

D. Work Defendants agree to indemnify and hold Cash

Defendants and their directors, officers and employees harmless

from damages or claims arising as a result of negligent

performance of the Work, or of negligent, willful, or wanton

failure to perform the Work by the Work Defendants or their

contractors or subcontractors. This Indemnity and hold harmless

as to Cash Defendants shall not apply to any Cash Defendant which

is not in compliance with the terms of this Decree. Furthermore,

this indemnity and hold harmless shall hot include any damages or

Third Partial Consent Decree Pago 63

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claims arising as a result of any negligent, willful or wanton

act or omission of any Cash Defendant or its directors, officers

or employees, nor shall it include any damages or claims which

arise or result from conditions at the Site which are not the

result of the Work performed under this Decree by the Work

Defendants or their contractors or subcontractors. Without

limiting the foregoing, the Work Defendants' obligation as to the

Cash Defendants shall not apply to any claim or cause of action

arising prior to the effective date of this Decree or to the

extent of any liability attributable to any third party,

including EPA, the State or any Cash Defendant. Any Cash

Defendant shall notify Work Defendants of any such claim or

action within thirty (30) days of receiving notice that such a

claim or action has been filed. Work Defendants shall have the

right to join in the defense of all claims or causes of action

within the scope of this indemnification. Further, unless Work

Defendants refuse to join in the defense as herein provided. Cash

Defendants shall not take or fail to take any action which would

prejudice Work Defendants' rights, privileges, defenses, or

claims, and shall not settle any claim or cause of action within

the scope of this indemnification without the consent of the Work

Defendants. Nothing in this paragraph XX.O shall be construed to

affect or pertain to the indemnification of the United States or

the State, as set forth in paragraph XX.A of this Section.

E. No later than 15 days after the effective date of this

consent Decree, Work Defendants shall secure and shall maintain

for the duration of this Consent Decree, the following insurance

covering claims arising out of activities or events related to

Third Partial Consent Deorea Page «4

ll this Consent Decree or the Site: (1) comprehensive general

21 liability insurance with limits of one million dollars, naming

3 the United States as Insured; (2) automobile insurance with

4 limits of one million dollars, naming the United States as

5 insured; and (3) employer's liability insurance with limits of at

6 least one million dollars per occurrence. Further, Work

7 Defendants shall use best efforts to secure and maintain

8 professional liability insurance with limits of at least one

9 million dollars per occurrence. In addition, for the duration of

10 this Consent Decree, Work Defendants shall satisfy, and shall

11 ensure that their contractors and subcontractors satisfy, all

12 applicable laws and regulations regarding the provision of

13 worker's compensation insurance for all persons performing work

14 on behalf of Work Defendants in furtherance of this consent

15 Decree. Prior to commencement of the Work under this Consent

16 Decree, Work Defendants shall provide to EPA certificates of such

17 insurance and a copy of each insurance policy. Work Defendants

18 shall resubmit such certificates and shall provide notification

19 of any significant changes in the policies, each year on the

20 anniversary of the effective date of this Consent Decree. If

21 Work Defendants demonstrate by evidence satisfactory to EPA that

22 any contractor or subcontractor maintains insurance equivalent to

23 that described above, or Insurance covering the same risks but in

24 a lesser amount, then with respect to that contractor or sub-

25 contractor Work Defendants need prove only that portion of the

26 insurance described above which is not maintained by the

27 contractor or subcontractor.

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Third Partial Consent Deores • 1 - y Page 65

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ZZI. FORCE MAJEURE

A. For purposes of this Consent Decree, force majeure is

defined as any event arising from causes beyond the control of

the Work Defendants, including, but not limited to, their

contractors, subcontractors, agents or consultants, that delays

or prevents the performance of any obligation under this Consent

Decree despite Work Defendants' best efforts to fulfill the

obligation. Force majeure shall not include: (1) increased

costs or expenses of any of the Work to be performed under this

Decree; nor (2) the financial inability of any of the Work

Defendants to perform such Work; nor (3) normal inclement

weather; nor (4) the failure of Work Defendants to make timely

application for any required permits or approvals, and to provide

all information required therefor in a timely manner.

B. The requirement that Work Defendants exercise "best

efforts to fulfill the obligation" includes using best efforts to

identify any potential force majeure event and best efforts to

address the effects of any potential force majeure event: (1) as

it is occurring, and (2) following the force majeure event, so

that the delay is minimized to the greatest extent possible.

C. If any event occurs or has occurred that may delay the

performance of any obligation under this Consent Decree, and Work

Defendants intend to invoke the force majeure provisions of this

Section, the Work Defendants shall orally notify EPA's Project

Coordinator or, in his or her absence, EPA's Alternate Project

Coordinator or, in the event both of EPA's Project Coordinators

are unavailable, the Director of the Hazardous Waste Management

Division, EPA Region IX, as soon as possible but no later than 72


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hours of when Work Defendants first knew or should have known

that the event might cause a delay. Within five (5) working days

of the oral notification, Nork Defendants shall provide in

writing to the EPA Project Coordinator a description of the cause

of the delay and the anticipated duration of the delay and, to

the extent possible at that time: all actions taken or to be

taken to prevent or minimize the delay; the schedule for

implementation of any measures to be taken to prevent or mitigate

the delay or the effect of the delay; Work Defendants' rationale

for attributing such delay to a force majeure event; and a

statement as to whether, in the opinion of Work Defendants, such

event may cause or contribute to an endangerment to public

health, welfare or the environment. Work Defendants shall

include with any notice all available documentation supporting

their claim that the delay was attributable to a force majeure

event. Failure to comply with the above requirements of this

Section shall preclude Work Defendants from asserting a claim of

force majeure for that event. Work Defendants shall be deemed to

have notice of any circumstances of which their contractors or

subcontractors had or should have had notice.

0. If EPA agrees that the delay or anticipated delay is

attributable to a force majeure event, the time for performance

of the obligations under this Consent Decree that are affected by

the force majeure event shall be extended by written agreement of

EPA and Work Defendants for such time as is necessary to complete

those obligations. An extension of the time for performance of

the obligations affected by the force majeure event shall not, of

itself, extend the time for performance of any subsequent

Third Partial Consent Decree -?s-

Page 67

obligation.

E. If EPA does not agree that the delay or anticipated

delay has been or will be caused by a force majeure event, or if

EPA and the Work Defendants do not agree on the length of the

extension for performance of the obligations affected by a force

majeure event, EPA shall notify the Work Defendants in writing of

its decision and the basis for its decision concerning whether

the delay is attributable to a force majeure event or the length

of the extension for performance of the obligations affected by a

force majeure event. If EPA determines that the event did not

constitute force majeure, then any delay caused by the event

claimed to be force majeure by the Work Defendants shall

constitute a violation of the Consent Decree and penalties shall

accrue from the date of violation.

F, Except as provided by this Decree, no deadline shall be

extended beyond that period of time which is necessary to

complete the activities with the shortest possible delay and in

no case beyond the actual delay attributable to the force majeure

event. Use of the force majeure provision shall not relieve Work

Defendants of their duty to complete all other tasks not

substantially affected in a timely manner in accordance with tho

schedules required by this Consent Decree and the Exhibits. Work

Defendants shall act to avoid or minimize delay.

G. If Work Defendants elect to invoke the dispute

resolution procedures set forth in Section XXII (Dispute

Resolution, page 69), they shall do so no later than 15 days

after receipt of EPA's notice pursuant to paragraph XXI.E of this

281 Section. In any such proceeding and to the extent the facts are

Third partial Consent Dacrea Page 68

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ll not stipulated to by the Parties, Work Defendants shall have the

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burden of demonstrating by a preponderance of the evidence that

the delay or anticipated delay has been or will be caused by a

force majeure event, that the duration of the delay was or will

be warranted under the circumstances, that best efforts were

exercised to avoid and mitigate the effects of the delay, and

that Work Defendants complied with the requirements of this

Section. If it is determined that Work Defendants have carried

this burden, the delay at issue shall be deemed not to be a

violation by Work Defendants of the affected obligation of this

Consent Decree identified to EPA and the Court, or as provided in

paragraph XXI.D (on page 67) of this Section.

H. The Cash Defendants shall not invoke the provisions of

this Section.

XXII. DISPUTE RESOLUTION

A. General Provisions

1. Unless otherwise expressly provided for in this

Consent Decree, the dispute resolution procedures of this Section

shall be the exclusive mechanism to resolve disputes arising

under or with respect to this Consent Decree and shall apply to

all provisions of this Consent Decree.

2. The dollar amounts specified for stipulated

penalties under Section XXIII (Stipulated Penalties, page 73),

are not subject to dispute resolution. Use of the dispute

resolution provision will not relieve work Defendants of their

duty to complete all other tasks that are not disputed nor

281 substantially affected by the disputed issue in a timely manner

Third Partial Conaent Dacrea R»9« «'

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in accordance with the schedules set forth in or developed

pursuant to this Consent Decree.

3. Nothing herein shall be construed to allow the

Work Defendants to dispute the Gas ROD.

B. . Informal Dispute Resolution

1. Any dispute which arises under or with respect to

this Consent Decree shall in the first instance be the subject of

informal negotiations between the parties to this dispute. The

period for Informal negotiations shall not exceed 20 days from

the time the dispute arises, unless it is extended by agreement

of the parties to the dispute. The dispute shall be considered

to have arisen when one party notifies the other parties in

writing that there is a dispute. The State may participate in

these negotiations, consistent with the provisions of paragraphs

XXXV.A and XXXV.B of Section XXXV (State and Local Agency

Participation, page 103).

2. In the event that the parties cannot resolve a

dispute by informal negotiations under the preceding paragraph

XXlI.B.l, then the position advanced by EPA shall be considered

binding unless, within 10 days after the conclusion of the

informal negotiation period. Work Defendants invoke the formal

dispute resolution provisions of this Section by submitting to

EPA a written statement of position on the matter in dispute,

including, but not limited to, any data, analysis or opinion

supporting that position and any documentation relied upon by

Work Defendants. Work Defendants' decision to invoke dispute

resolution shall not in and of itself constitute a force majeure

event under Section XXI (Force Majeure, page 66) . The Work

Third Partial Consent Dacrae

•1-s-Page 7 0

1 Defendants reserve the right to dispute a determination regarding

2 whether a force majeure event has occurred.

3 C. Formal Dispute Resolution Mechanism

4 1. Formal dispute resolution for disputes shall be

5 conducted pursuant to the procedures set forth in this paragraph

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i XXII.C.

a. The administrative record of the dispute

shall be maintained by EPA and shall include all statements of

position, including supporting documentation, submitted pursuant

to this paragraph XXII.C and paragraph XXII.B.2 above.

b. Within twenty-one (21) days after receipt of

Work Defendants' statement of position submitted pursuant to

paragraph XXII.B.2, EPA shall serve on Work Defendants its

statement of position, including, but not limited to, any factual

data, analysis, or opinion supporting that position and all

supporting documentation relied upon by EPA, in response to Work

Defendants' statement of position. Where appropriate, EPA may

allow submission of supplemental statements of position by the

parties to the dispute, such as where new information has been

provided in a response.

c. The Director of the Hazardous Waste

Management Division, EPA Region IX or his or her designee, but

not the Project Coordinator designated pursuant to Section XIII

(Project Coordinators, page 38), shall issue a final

administrative decision resolving the dispute which shall be

based on the administrative record compiled pursuant to this

Section. This decision shall be binding upon the Work

Defendants, subject only to the right to seek judicial review


J I pursuant to paragraphs XXII.C.l.d and XXII.C.I.e below.

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d. Any administrative decision by EPA pursuant

to paragraph XXII.C.l.c above shall be reviewable by this Court,

provided that a notice of judicial appeal is filed by the Work

Defendants with the Court and served on all parties within 15

days of receipt of EPA's decision. The notice of judicial appeal

shall include a description of the matter in dispute, the efforts

made by the parties to resolve it, and the relief requested.

Within thirty (30) days of receipt by EPA of such notice or

within the schedule set forth by the court, the United states or

the State may file a response to Work Defendants' notice of

12 judicial appeal. In proceedings on any dispute relating to the

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selection, technique, cost effectiveness or adequacy of any

aspect of the Work and in any other dispute subject to CERCLA

Sections 113{j)(l) and (2), 42 U.S.C. SS 9613(j)(l) and (2), in

considering Work Defendants' objections, the Court shall uphold

EPA's decision unless Work Defendants can demonstrate, on the

administrative record compiled pursuant to this Section, that

EPA's decision was arbitrary and capricious or otherwise not in

accordance with law. In other disputes, except as specified in

this Section and in paragraph XXI.G (on page 68) of Section XXI

(Force Majeure), the appropriate standard of judicial review and

scope of materials to be considered by the Court shall be

determined by the Court.

e. Work Defendants shall have the burden of

persuasion on factual issues.

Third Partial Consent Decree -?o-

Paga 72

ll D. work Defendants' Work obligations During Disput.;.

2I RegolHtAon

31 Notwithstanding the invocation of the procedures stated in

41 this Section, Work Defendants shall continue to perform their

51 other obligations under this Consent Decree, including those that

61 are not disputed or not substantially affected by the disputed

7 1 issue.

BI E. Obligations After Resolution of Dispute

91 If the Court finds that the Work Defendants have not

101 satisfied their burden, the Nork Defendants shall transmit

Ili payment of all penalties which have accrued during the dispute,

12j plus interest at the rate specified in Section 107(a) of CERCLA,

131 to the Hazardous Substance Superfund, within fifteen (15) working

14 1 days of the Court's entry of the order or decision resolving the

151 dispute. The Work Defendants shall then Implement the disputed

161 matter as resolved and perform the work which was the subject of

171 the dispute, if required. The appropriate plans should be

18 1 amended to reflect the resolution of the dispute. In any dispute

191 in which the Work Defendants prevail: (1) the deadlines for any

20j affected deliverables shall be extended to account fully for any

211 delays attributable to the dispute resolution procedures; and (2)

22! any penalties which would otherwise accrue for violations of any

23 1 affected deliverable shall be void.

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251 ZXIII. STIPULATED PKMALTIBS

261 A. General Provisions

27! 1. Work Defendants shall be liable for stipulated

281 penalties where EPA determines that there has been: (a) late or

Third Partial Consent Dacrea Page 7 3

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inadequate submittal or resubmittal of a document or deliverable

required by this Decree; (b) late or inadequate payment; (c)

untimely or Inadequate Work; (d) unauthorized activity at the

Site; (e) violation of Section XVI (Retention of Records, page

48); (f) failure to achieve a Performance Standard after EPA

approval of the Construction Completion Report; or (g) failure to

achieve any other requirement under, or to comply with the terms

of this Consent Decree.

2. For an inadequate submittal or inadequate Work,

EPA shall provide to Work Defendants, as soon as possible, oral

notification of the occurrence of an event that triggers

stipulated penalties, with written confirmation within seven (7)

days of the occurrence of the event. For purposes of this

paragraph XXIII.A.2, stipulated penalties shall accrue from the

date on which Work Defendants receive such written confirmation.

Notification shall not be required for late or untimely

submittals.

3. Each Cash Defendant shall be liable for stipulated

penalties for: (1) late or Inadequate payment pursuant to

paragraph XVII.A.4 (Payments by Cash Defendants, page 52) of

Section XVII (Reimbursement of Response Costs) and Exhibit C to

this Decree; or (2) a violation of Section XVI (Retention of

Records, page 48). The stipulated penalty for any late payment

or payment of less than the full amount due under this Decree

shall be $25,000 per day. Payments shall be made in accordance

with paragraph XXIII.A.5 of this Section.

4. Penalties shall accrue from the date on which a

violation of this Decree occurs and shall continue to accrue


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l| through the final day of the noncompliance.

21 5. Stipulated penalties under this paragraph XXI11.A

3 1 shall be paid by certified check made payable to the Hazardous

41 Substance Superfund, and addressed as indicated in Section xvil

51 (Reimbursement of Response Costs, page 51) and shall be paid

e! within thirty (30) days of receipt of the written demand for

78 payment of stipulated penalties. Failure to pay a stipulated

8J penalty on tine also constitutes an event subject to stipulated

91 penalties. A copy of tha check and the letter forwarding the

101 check, including identification of this Consent Decree and a

111 brief description of the triggering event, shall be submitted to

121 the United States in accordance with the directions set forth in

13 1 Section XXVII (Form of Notice, page 97) herein.

14 1 6. Defendants shall pay interest on all stipulated

151 penalties, which shall accrue from the date payment is due at the

161 rate established by the Department of Treasury under 31 U.S.C.

I7I S 3717 and 4 C.F.R. S 102.13.

18j 7. Notwithstanding the stipulated penalties specified

191 in the provisions of this Section, and to the extent authorized

201 by law, EPA or the State may elect to assess civil penalties or

211 bring an action in District Court to enforce the provisions of

221 this Consent Decree. Payment of stipulated penalties shall not

231 preclude EPA or the State from electing to pursue any other

24 I remedy or sanction against any Defendant to enforce this Consent

251 Decree, and nothing shall preclude EPA or the State.from seeking

261 statutory penalties against the Work Defendants for violations of

27 1 statutory or regulatory requirements relating to the performance

281 of the Work under this Decree, provided that the total shall not

Third Partial Consent Decres Page 75

exceed the CERCLA statutory maximum per day per violation.

8. In the event the EPA or its designee assumes the

performance of a portion or all of the Work, pursuant to

paragraph VII.C.7 (Failure to Perform, page 29) of Section VII

(Work To Be Performed), and Section XXVI (Reservation of Rights,

page 93), the Work Defendants shall be liable for stipulated

penalties pursuant to this Section. If the EPA or its designee

8 performs all or a portion of the Work because of the Work

9 Defendants' failure to comply with their obligations under this

10 Consent Decree, the Work Defendants shall reimburse the EPA- for

11 the costs of doing such work, plus penalties pursuant to this

12 Section, within thirty (30) days of receipt of demand for payment

13 of such costs.

14 9. The Work Defendants are jointly and severally

15 liable for any stipulated penalties pursuant to the provisions of

16 this Section provided, however,' that the total amount due and

17 payable for each day of each violation shall not exceed those

18 limits specified in this Section. The dollar amounts specified

19 for penalties are not subject to Section XXII (Dispute

20 Resolution, page 69). In the event that Work Defendants Invoke

21 dispute resolution under Section XXII (Dispute Resolution, page

22 69), the dispute resolution process shall not toll or suspend the |

23 accrual of stipulated penalties nor accrual of interest thereon.

24 . 1 0 . Separate penalties shall accrue simultaneously

25 for separate violations of this Consent Decree.

26 11. Except as provided in Section XXII (Dispute

27 Resolution, page 69), neither the invocation of dispute

28 resolution procedures under Section XXII (Dispute Resolution,

Third Partial Consent Dacrae Poge 7 6

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page 69) nor the payment of penalties shall alter in any way work

Defendants' obligation to complete the performance of the Work

required under this Consent Decree.

12. No payments made under this Section shall be tax

deductible for Federal tax purposes.

B. OgHverablaa Required F^ytmnnt tg thJis Degree

Any Reports, Plans, speciticatim ;. schedules,

amendments, revisions, and appendices required by this Consent

Decree are, upon approval by EPA, incorporated into this Consent

Decree, but only to the extent not inconsistent with this Decree.

Except as provided in paragraph VII.C.6 (on page 28) of Section

VII (Work To Be Performed), EPA reserves the right to disapprove

any such documents. Any noncompliance with such EPA-approved

Reports, Plans, specifications, schedules, amendments, revisions,

and appendices shall be considered a violation of this Consent

Decree and subject to stipulated penalties as governed by this

Section. The Work Defendants shall pay the following stipulated

penalties for each failure to comply with the requirements of

this Decree, including but not limited to all Implementation

schedules and performance and submission dates:

1. Prggttgg Repgrta

If EPA determines that a Progress Report is inade

quate, or if the Work Defendants fail to submit any required

Progress Report according to schedule, then the Work Defendants

shall be considered to be in violation of this Consent Decree and

Work Defendants shall pay stipulated penalties of $1,000 per day

for each such violation.

Third Partial Consent Dacrae Page 77

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2. Amount of Stipulated penalties bv Class

For purposes of the amount of stipulated

penalties, each deliverable other than Progress Reports shall be

designated by a Class as set forth below,

a. eiaigs I Requir^ffffnta

j Period of Failure to Comply

1st through 30th day

31st through 4 5th day

1 4 6th day and beyond

Penalty per day per event

$ 2,500

$ 8,000

$10,000 1

Class II Requireipentg

1 Period of Failure to Comply


16th through 30th day


1 4 6th day and beyond

Penalty per day per event

$ 3,000

$ 7,000

$10,000

$15,000 1

c. CXa>3s m Rgquirementg

1 Period of Failure to Comply


16th through 30th day

31st through 4 5th day

) 4 6th day and beyond

Penalty per day per event |

$ 5,000

$10,000

$15,000

$20,000

Third partial consent Dacrea -(Sd.

Faga 78

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3. Deliverable Class List

Classification of deliverables for purposes of the

amount of Stipulated Penalties shall be as follows.

a. Predesign Period

Work Plan i

outline

Prefinal

Final

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III

Safety, Health and Emergency Response

Outline

Prefinal

Final

Amendments (if applicable)

Plan

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III

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Quality Assurance/Quality Control Plan

Outline

Prefinal

Final

Amendments (if applicable)

b. Design Period

III

Predesign Report

Outline I I

Prefinal

Final III

Third Partial Conaent Decree Page 79

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Design Package |

Preliminary

Intermediate

Prefinal

Final

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III

Outline

Prefinal

Final

Revised Plan

Second Revision (if applicable)

c. Construction Period

II

Contractor Selection Notification

Construction As-Built Reports I

Outline

Prefinal

Final

Revised

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d. Compliance Testing Period

Compliance Testing Reports

I

ion Completion Report


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Operation and Maintenance Period

EJJon All

Noncompliance Notifications

III

Compliance Action Plans

All II

Compliance Correction Reports

All

Work Completion Reports

All (including Excluded Work Completion Reports, if a

Technical Memoranda

Technical Memoranda

Preliminary Minor Technical Memorandum

Final Minor Technical Memorandum

Preliminary Major Technical Memorandum

Prefinal Major Technical Memorandum

Final Major Technical Memorandum III

c.

4. Other Deliverables

a. Quarterly Escrow Reports:

b. All other deliverables not otherwise

identified in this Section:

Other Stipulated Penalties

1. If EPA determines that the Work or any portion of

II

II

Third Partial consent Dacrea Page 81

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ij the Work has not been timely commenced, the Work Defendants shall T ^.^ J 1 .. _ . . . . . .

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be deemed to be in violation of this Decree and Class II

stipulated penalties shall accrue from the date on which EPA

determines such Work should have commenced to the actual

commencement date.

2. If EPA determines that Work Defendants have failed

to comply with any Integration requirements as defined in the

Scope of Work, Class II stipulated penalties shall accrue during

9J the period of such noncompliance.

3. If EPA determines that Work Defendants have

suspended performance of all or a portion of the Work, unless

otherwise allowed by the terms of this Decree, they shall be

deemed to be in violation of this Decree and shall pay a

stipulated penalty of $6,000,000 in lieu of any other stipulated

penalties for that specific violation.

4. In the event that EPA determines that Work

Defendants have failed to perform any material portion of the

Work or have performed any portion of the Work in a substantially

inadequate or substantially untimely manner, or in the event of

an imminent and substantial endangerment to public health or

welfare or the environment resulting from the performance of, or

the failure to perform Work by Work Defendants, Work Defendants

shall pay a stipulated penalty of $2,000,000 in lieu of any other

stipulated penalty for that specific violation.

5. Defendants' obligations under Section XVI

(Retention of Records, page 48) shall be considered Class II

requirements as set forth in this Section, and any Defendant

failing to comply with such obligations shall be subject to

Third Partial Consent Decree t t iqa 82

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penalties applicable to Class II requirements.

6. The dollar amount specified for a stipulated

penalty under this Section shall be reduced by 35% for any

violation of this Decree by Work Defendants which relates

exclusively to an item of Excluded Work being performed by Work

Defendants under Section VIII (Excluded Work, page 29).

XXIV. C0VBMAHT8 HOT TO SUB

A. In consideration of the actions that will be performed

and the payments that will be made by the Defendants under the

terms of this Consent Decree, and except as specifically provided

for in this Section, the United States covenants not to sue or to

take administrative action against the Defendants pursuant to

Sections 106 and 107(a) of CERCLA and Section 7003 of RCRA

relating to the Work, Excluded Work, Past Response Costs and

Future Oversight Costs. Except with respect to future liability,

these covenants not to sue shall take effect upon the receipt by

EPA of the payments required by paragraph XVII.A (page 51) of

Section XVII (Reimbursement of Response Costs). With respect to

future liability, these covenants not to sue shall take effect

upon Certification of Completion of the Remedial Action by EPA as

described in Section XXV (Certificate of Completion, page 91).

These covenants not to sue are conditioned upon the complete and

satisfactory performance by Defendants of their obligations under

this Consent Decree. These covenants not to sue extend only to

each Defendant and do not extend to any other person.

B. This Section is not, and shall not be construed as, a

281 covenant not to sue any Defendant that does not fulfill its

Third Partial Consent Oeoree F>9a 83

obligations arising out of this Decree, or any other person or

entity not a Party to this Decree.

C. United States' Pre-certification reservations

Notwithstanding any other provision of this Consent Decree,

the United States reserves, and this Consent Decree is without

prejudice to, the right to institute proceedings in this action

71 or in a new action, or to issue an administrative order seeking

8 to compel Defendants: (I) to perform further response actions

9 relating to the Remedial Action as defined in Section XXV

10 (Certificate of Completion, page 91) , or (2) to reimburse the

11 United States for additional costs of response if, prior to

12 certification of completion of the Remedial Action:

13 a. conditions at the Site, previously unknown to

14 the United States, are discovered after the entry

15 of this Consent Decree, or

16 b. information is received, in whole or in part,

17 after the entry of this Consent Decree,

18 and these previously unknown conditions or this information

19 together with any other relevant information indicates that the

20 Remedial Action is not protective of human health or the

21 environment.

22 D. United States Po^t-certification reservations

23 Notwithstanding any other provision of this Consent Decree,

24 the United States reserves, and this Consent Decree is without

25 prejudice to, the right to institute proceedings in this action

26 or in a new action, or to issue an administrative order seeking

27 to compel Defendants: (1) to perform further response actions

28 relating to the Remedial Action as defined in Section XXV

Third partial Consent Decree Page 84

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(Certificate of Completion, page 91), or (2) to reimburse the |

United States for additional costs of response if, subsequent to

certification of completion of the Remedial Action:

a. conditions at the Site, previously unknown to

the United States, are discovered after the

certification of completion, or

b. Inforaatlon is received, in whole or in part,

after the certification of completion,

and these previously unknown conditions or this information

together with other relevant information indicate that the

Remedial Action is not protective of human health or the

environment.

E. For the purposes of paragraph XXIV.C, the information

previously received by and the conditions known to the United

States shall include only that information and those conditions

set forth in: (1) the Gas ROD: (2) the administrative record

supporting the Gas ROD; and (3) information received by EPA

pursuant to the Remedial Investigation after the completion of

the administrative record supporting the Gas ROD, prior to the

entry of this Decree. For the purposes of paragraph XXIV.D, the

information previously received by and the conditions known to

the United States shall include only that information and those

conditions set forth in: (1) the Gas ROD, (2) the administrative

record supporting the Gas ROD, (3) information submitted to EPA

pursuant to the requirements of this Consent Decree or submitted

to EPA pursuant to any other action implementing the Excluded

Work prior to the certification of completion of the Remedial

Action, and (4) information received by EPA pursuant to the

Third Partial consent Daoree Vaga 85

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Remedial Investigation after completion of the administrative

record supporting the Gas ROD, prior to the certification of

completion of the Remedial Action.

F. Except as provided by this Decree, and subject to

Section XXVI (Reservation of Rights, page 93), the State, the

California Hazardous Substance Account, and the Attorney General

of California (with respect to the authority under California

Government Code SS 12600-12612) covenant not to sue or take any

administrative action against the Defendants for Work, Excluded

Work and Past Response Costs which are performed satisfactorily

by Defendants. These covenants not to sue shall take effect upon

the receipt by the State of payments rec[uired by Section XVII

(Reimbursement of Response Costs, page 51) . This covenant not to

sue is conditioned upon complete and satisfactory performance by

Defendants of their obligations under this Consent Decree. These

covenants not to sue extend only to each Defendant and do not

extend to any other person.

G. 1. Notwithstanding any other provision in this

Consent Decree, for any Defendant that:

a. Failed to submit a list of subsidiaries,

divisions, and affiliated entities to EPA on or before the date

of submission of its signature page; or

b. Submitted a list but did not elect to settle

on behalf of any subsidiary, division or affiliated entity

identified by EPA; or

c. Submitted a list that failed to Include any

subsidiary, division or affiliated entity later identified as a

potentially responsible party by EPA;

Third Partial Consent Dacrea Page 86

this covenant not to sue shall extend only to the signatory

Defendant and shall not extend to any subsidiary, division, or

affiliated entity whose volume is not currently included in the

volume attributed to that signatory Defendant as set forth in

Exhibit E, Third Partial Consent Decree 1991 Volumetric List.

2. The names and cash payments for each subsidiary,

division, and affiliated entity, other than those identified in

Exhibits C and D, for which Defendant(s) have elected to settle,

are set forth in Exhibit F hereto. Schedule A of Exhibit F sets

forth the identity of any subsidiary, division and affiliated

entity which has been identified as related to a signatory Work

Defendant. Schedule B sets forth the identity of any subsidiary,

division, or affiliated entity which has been identified as

related to a signatory Cash Defendant.

3. The payments listed in Schedules A and B of

Exhibit F shall be made in the amounts and in the manner set

forth in those Schedules and shall be due thirty (30) days after

notice of entry of the Consent Decree. Payments made by a Work

Defendant on behalf of any subsidiary, division, or affiliated

entity under this paragraph shall not offset the Work Defendants'

guarantee of payment of past costs pursuant to Section XVII

(Reimbursement of Response Costs, page 51).

4. For the purposes of the implementation of this

Consent Decree, upon receipt of payment of the amounts set forth

in Schedule A or Schedule B, each such identified subsidiary,

division or affiliated entity listed in Exhibit F, shall have the

same rights and obligations as a Cash Defendant under this

28 I Decree.


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5. Nothing in this paragraph XXIV.G shall be deemed

to grant a covenant not to sue to any person or entity included

on a list submitted pursuant to this paragraph which is not

listed on Exhibit F.

H. Defendants release and covenant not to sue the United

States, including any and all departments, agencies, officers,

administrators, and representatives thereof, for any claim,

counter-claim, or cross-claim asserted, or that could have been

asserted prior to the effective date of this Consent Decree or

arising out of or relating to the Work, Excluded Work, Past

Response Costs, and Future Oversight Costs, including any direct

or Indirect claim for reimbursement from the Hazardous Substance

Superfund established through CERCLA Sections 10e(b)(2), 111 or

112, Internal Revenue Code 26 U.S.C. S 9507, or any other

provision of law, or to seek any other costs, damages or attor

neys' fees from the United States, except for any liability for

the Work, Excluded Work, Past Response Costs and Future Oversight

Costs for any federal entity that has not resolved its liability

for the Work, Excluded Work, Past Response Costs, and Future

Oversight Costs under this Decree or its equivalent. Defendants

also release and covenant not to sue the California Hazardous

Substance Account or the State, including any and all officers,

administrators, and representatives thereof for any claim,

counter-claim, or cross-claim asserted, or that could have been

asserted prior to the effective date of this Decree arising out

of or relating to the Work, Excluded Work, Past Response Costs,

and Future Oversight Costs, except for any such liability for any

state entity that has not resolved its liability for the Work,

Third Partial Conaent Decree Page 88

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Excluded Work, Past Response Costs, and Future oversight Costs.

I. Notwithstanding any other provision in this Consent

Decree, this covenant not to sue shall not relieve the Defendants

of their obligation to meet and maintain compliance with the

requirements set forth in this Consent Decree, specifically

Including the Performance Standards. The United States reserves

all its rights to take response actions at the Site, including

the right to take response action in the event of a breach of the

terms of this Consent Decree and to seek recovery of costs which:

1) result from such a breach: 2) relate to any portion of the

111 Work funded or performed by the United States; or 3) are

12

13

14

enforcement costs incurred by the United States associated with

the Site.

J. Each Defendant is expressly not released from, and the

15j provisions of paragraph XXIV.A of this Section shall not apply

16 to, any matter not expressly addressed by this Consent Decree,

17 including the following claims:

18 1. Any claim based on a failure by any Defendant to

19 meet the obligations of this Decree;

20 2. Any other claims of the United States, EPA, the

21 California Hazardous Substance Account or the State for any other

22 costs or actions at the OII Site which are not Work, Excluded

23 Work, Past Response Costs or Future Oversight Costs;

24 3. Claims based on the Defendant(s)' liability

25 arising from the past, present, or future disposal of Waste

26 Materials not associated with the Oil Site at other disposal

27 sites;

28 1 4. Any claim based on liability for damage to Federal

Third Partial Consent Daoraa Page 89

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11 or State property Jocated any place that the Work is being

performed;

5. Claims based on criminal liability;

6. Claims based on liability for damage to natural

resources as defined in CERCLA;

7. Claims based on liability for Waste Materials

removed from the Site;

8. Claims based on liability for monitoring or

oversight expenses incurred by the United States or the State

except as those expenses are recovered by the United States

pursuant to Section XVII (Reimbursement of Response Costs, page

51) or relating to Excluded Work other than the Cover Protection

Component of the North Slope of the South Parcel; or

9. Liability for any violations of Federal or State

law which occur during implementation of the Work.

K. Nothing in this Consent Decree shall constitute or be

construed as a release or covenant not to sue regarding any claim

or cause of action against any person as defined in Section

101(21) of CERCLA or California Health and Safety Code S 25319,

or any other entity not a signatory to this consent Decree for

any liability it may have arising out of or relating to the Site.

L. The Parties to this Decree agree that while the United

States, EPA, the State and the California Hazardous Substance

Account may support the applicability of Section XXX

(Contribution Protection, page 100) based upon the existence of

this Decree, neither the United States, nor EPA nor the State nor

the California Hazardous Substance Account shall be under any

obligation to support the Defendants in any way in any action for

Third Partial Consant Dacrea

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contribution brought by or against the Defendants which alleges

liability for matters addressed by this covenant not to sue.

H. B^gPOngPillltY iCftg HorK

As to the Cash Defendants, the Nork Defendants shall have

the exclusive responsibility for the performance of the Nork and,

conditional upon satisfactory completion of all obligations of

Cash Defendants under this Decree, the Cash Defendants shall have

no responsibility to tha United States, EPA, the State, the

California Hazardous Substance Account, any other Defendant or

any third party for the performance, or failure of performance,

of the Work Defendants.

N. Responsibility for Cash Defendants' Payments

The Work Defendants shall have no responsibility to the

United States, EPA, the State, the California Hazardous Substance

Account, any other Defendant, or any third party for any payment

required of, or failure to pay by, any Cash Defendant under this

Decree.

XZV. CERTIFICATE OF COMPLETION

A. The Parties to this Decree agree that the Work

addresses only a portion of the Remedial Action and that a

Certificate of Completion will be issued by EPA only upon

completion of the Remedial Action. For the purposes of this

Section and Section XXIV (Covenants Not to Sue, page 83),

Remedial Action shall be defined as the Work, the Excluded Work

and three years of the joint performance of operations,

maintenance and monitoring of both the Work and the Excluded Work

to demonstrate that the Work and Excluded Work are successful in


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attaining the Performance Standards set forth in the Gas ROD and

protecting human health and the environment.

B. Application for Certificate of Completion

1. In the event the Remedial Action is performed at

the time Work Defendants submit the Work Completion Report for

EPA approval pursuant to Section XLII (Termination and

Satisfaction, page 107), the Work Defendants may petition EPA for

8 j the issuance of the Certificate of Completion pursuant to this

Section. If at the time the Work Defendants submit the Work

Completion Report to EPA for approval, the Work, Excluded Work

and three years of joint operations, maintenance and monitoring

have not been fully performed. Defendants shall not invoke the

provisions of this Section.

2. Cash Defendant (s) may petition EPA for Issuance of

the Certificate of Completion on the same terms and conditions as

set forth in paragraph XXV.B.l above; however, prior to such

application Cash Defendant(s) shall notify the Work Defendants

and obtain their consent to this petition. The Work Defendants

shall not unreasonably withhold consent.

C. Completion of the Remedial Action

1. Within 90 days after Defendants conclude that the

Remedial Action, as defined in paragraph XXV.A, above, has been

performed and the Performance Standards have been attained.

Defendants shall so certify to the United States and the State

and shall schedule and conduct a pre-certification inspection to

be attended by Work Defendants, EPA and the State. If, after the

pre-certification inspection. Defendants still believe that the

Remedial Action has been performed and the Performance Standards

Third Partial conaent Decree Pag* 92

ll have been attained, they shall submit a written report to EPA for

21 approval pursuant to the procedures set forth in Section 6.3.1 of

3 1 the SOW within 30 days of tha inspection. In the report, a

41 registered professional engineer and the Work Defendants Project

SI Coordinator shall certify that the Remedial Action has been

6 completed in satisfaction of the requirements of this Consent

7 Decree. The written report shall include as-built drawings

8 signed and stamped by a registered professional engineer. The

9 report shall contain the following statement, signed by the Work

10 Defendant's Project Coordinator:

11 "To the best of my knowledge, after thorough investigation,

12 I certify that the infonnation contained in or accompanying

13 this submission is true, accurate and complete."

14 The State shall participate consistent with the provisions of

15 Section XXXV (State and Local Agency Participation, page 103).

16 2. If, after completion of the pre-certification

17 inspection and receipt and review of the written report, EPA

18 determines that the Remedial Action or any portion thereof has

19 not been performed, EPA will notify Defendants and state the

20 basis for its decision.

21 3. If EPA concludes that the Remedial Action has been

!2 fully performed, EPA will issue the Certificate of Completion.

!3

!4 ZZVI. RESERVATION OF RZOHTB

15 A. Notwithstanding compliance with the terms of this Con-

'6 sent Decree, including the completion of EPA-approved Work, the

7 Defendants are not released from liability for any matters other

81 than those expressly addressed by this Consent Decree. For

Third Partial Consant Daoree 'age 93 -(0(-

ij matters beyond the scope of this Consent Decree, the United

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States, EPA, the State, and the California Hazardous Substance

Account reserve the right to take any enforcement action pursuant

to CERCLA and/or any other authority, including the right to seek

response costs, injunctive relief, monetary penalties, and

punitive damages,

B. Notwithstanding any other provision in this Decree, the

Covenant Not to Sue, as provided in Section XXIV (Covenants Not

to Sue, page 83), shall not relieve any Defendant of its

obligation to meet and maintain compliance with the recjuirements I

set forth in this Decree. The United States, EPA and the state

reserve all rights to take enforcement actions for violations of

this Decree.

C. Except as provided in this Decree, the United States,

EPA and the State reserve the right to take any enforcement

action pursuant to CERCLA and/or any other authority, including

the right to seek Past Response Costs or Future Oversight costs,

injunctive relief, monetary penalties, and punitive damages for

any civil or criminal violation of law or this Consent Decree.

D. In the event EPA determines that the Work Defendants

have failed to implement any provisions of the Work in an

adequate or timely manner, or in the event EPA determines that

any site condition constitutes an Imminent or substantial

endangerment to the public health or welfare or the environment,

EPA or its designee may perform any and all portions of the Work

as it determines necessary, subject to the reimbursement

provisions of paragraphs XVII.E.1 and XVII.E.3 (page 56) of

Section XVII (Reimbursement of Response Costs). If EPA decides

Third Partial Consant Decree -IOJ--

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1 to perform work that is the subject of this Decree or to have its

2 designee perform such work, EPA will provide the Work Defendants'

3 and the State's Project Coordinator with advance notice thereof

4 and, to the extent practicable, the opportunity for consultation

5 regarding EPA's intention to perform all or a portion of the

6 Work. EPA and the State may agree that the state may perform

7 work pursuant to the provisions of this paragraph.

8 E. Except as provided in Section XXIV (Covenants Not to

9 Sue, page 83), nothing in this Consent Decree shall be deemed to

10 limit the response authority of EPA under Section 104 of CERCLA,

11 42 U.S.C. S 9604, and under Section 106 of CERCLA, 42 U.S.C.

12 § 9606, or under any other Federal response authority. In either

13 event, the United States reserves the right to seek reimbursement

14 from the Defendants for such costs incurred by the United States.

15 F. Except as otherwise provided in this Decree, the United

16 States expressly reserves all rights and defenses that it may

17 have. Including the right to disapprove of Work performed by the

16 Work Defendants, to require Work Defendants to correct inadequate

19 performance of Work, and to request, pursuant to Section IX

20 (Additional Work, page 34), that the Work Defendants perform

21 tasks in addition to those detailed in the Plans prepared

22 pursuant to this Consent Decree.

23 G. The United States further reserves the right to require

24 Defendants to perform tasks in addition to those detailed in this

25 Consent Decree, if EPA determines after EPA's approval of

26 Defendants' Work Completion Report that additional response work

27 is necessary to carry out the activities required by this Decree

28 or to meet the Performance Standards.

Third Partial Consent Decrsa HCJ

Page 95

§: -i ...M <L..-Ji

H. Defendants waive any right they might have to initiate

a challenge to the dollar amount specified for stipulated

penalties set out in Section XXIII (Stipulated Penalties, page

73) of this I>ecree.

I. Nothing in this Decree shall be deemed to limit the

6 response authority of the State under Section 25358.3 of the

7 California Health and Safety Code or under any other response

authority, except to the extent that Defendants have a covenant

not to sue under Section XXIV (Covenants Not To Sue, page 83).

J. In no case shall any Defendant be entitled to a refund

or to assert a claim against the Superfund under Sections

12 106(b)(2) or 112 of CERCLA for any amount paid, or work

performed, under this Decree even if that Defendant is later

determined, based upon its assertion of defenses, to be not

liable for response costs for the Site or to be liable for

response costs less than those' paid or expended pursuant to this

Decree.

K. Except as provided in Section I (Jurisdiction, page 3),

Section II (Parties Bound, page 3), and Section XXXVII (Other

Claims, page 105), Defendants expressly reserve all legal and

equitable rights and defenses that they may have under this

Decree, CERCLA, or any other legal authority, including all

arguments concerning compliance with the specific tasks and

requirements of this Decree. Except as provided by this Decree

and Section 113(f)(2) of CERCLA, this reservation of rights

applies to all claims, actions and defenses of Defendants against

nonsettlors, the United States, the State of California, EPA or

any others and to those assertable between and among the

Third Partial Consent Decrsa Page 96

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individual Defendants. Except as provided in Section XXXI

(Defendants' Right of Contribution and Indemnity and Covenant Not

to Sue Each Other, page 101) and Section XXXVII (Other Claims,

page 105) or othorwisa in this Decree, these rights include, but

are not limited to. the right to seek reimbursement for response

actions taken and response costs paid by any of the Defendants at

any tine.

L. Defendants reserve any and all rights of contribution

from any or all persons who are not Defendants as defined herein

for all costs Incurred by Defendants under this Decree or

otherwise complying with the requirements of this Decree.

Nothing in this Decree shall be construed as limiting Defendants'

right to seek contribution from any or all liable persons who are

not Defendants.

M. It is the policy of the United States to identify

potentially responsible parties who do not participate in CERCLA

settlements and, subject to its non-reviewable prosecutorial

discretion, to seek performance of remedial action not recovered

by settlement and/or to seek reimbursement of response costs not

covered by settlement, against such nonsettling parties pursuant

to the provisions of CERCLA.

ZZVII. FORM OF NOTICE

A. All communications between the Nork Defendants or the

Contractor(s), and EPA and the State made pursuant to this

Consent Decree shall be sent to at least the Work Defendants, the

71 State and EPA. Subject to paragraph XV.H (on page 47) of Section

81 XV (Data Exchange: Sampling and Analysis), any Cash Defendant

Third Partial Consent Oaores Page 97

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may obtain, upon written request, a copy of any or all such

communications. The cost of copying any such material shall be

borne by the Cash Defendant making the request.

B. When notification to or communication with the United

States, EPA, the State, the Work Defendants, or the Work

Defendants under the First Decree is required by the terms of

this Consent Decree, it shall be in writing, postage prepaid, and

addressed as follows:

As to the United States;

Chief, Environmental Enforcement Section Environment and Natural Resources Division Department of Justice 10th and Pennsylvania Avenue, N.W. Washington, DC 20530

As to EPA:

EPA Project Coordinator - OII Site Superfund Enforcement Section (H-7-1) U.S. Environmental Protection Agency, Region IX 75 Hawthorne St. San Francisco, CA 94105

Assistant Regional Counsel - OII Site Office of Regional Counsel (RC-3) U.S. Environmental Protection Agency, Region IX 75 Hawthorne St. San Francisco, CA 94105

As to the Work Defendants:

Project Co-Chairaen c/o Boone & Associates suite 204 901 Corporate Center Drive Monterey Park, CA 91754

David A. Giannotti, Esg. Kaye, Scholar, Fierman, Hays £ Handler 1999 Avenue of the Stars, Suite 1600 Los Angeles, CA 90067

Third Partial Consent Decree ^(01,-

Page 98

As tq the State:

Department of Toxic Substances Control Attention: OII Project Coordinator Toxic Substances Control Program 1405 San Fernando Road, Suite 300 Burbank, CA 91504

As to Work Defendants under the First Decree:

OII Project Coordinator CURE, Inc. 2500 Greenwood Avenue Monterey Park, CA 91754

ZXVIII. MODIFICATION

A. Except as otherwise provided in this Decree, no

modification shall be made to this Consent Decree without written

notification to and written approval of all of the Parties to

this Consent Decree and the Court. The notification required by

this Section shall set forth the nature of and reasons for the

requested modification. No oral modification of this Consent

Decree shall be effective. Nothing in this Section shall be

deemed to alter the Court's power to supervise or approve

modifications to this Consent Decree or to limit EPA's authority

to modify the Gas ROD in accordance with CERCLA and the NCP.

B. Notwithstanding the above, the parties nay make

modifications to the SOW pursuant to the SOW.

ZZIZ. ADMISSIBILITY OP DATA

A. For the purpose of this action only, the Parties waive

any evidentiary objection as to the authenticity of data

gathered, generated, or evaluated by any Party in the performance

or oversight of the Work under this Decree that have been

Third Partial consent Deorea Page 99

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verified using the Quality Assurance and Quality Control

procedures specified in Section XII (Quality Assurance/Quality

Control, page 36).

B. For the purpose of this action only, the Parties also

waive any objections to the introduction of such data based on

hearsay.

ZZZ. CONTRIBUTION PROTECTION

A. With regard to claims for contribution against

Defendants for matters addressed in this Consent Decree, the

Parties agree that the Defendants are entitled, as of the

effective date of this Consent Decree, to such protection from

contribution, actions or claims as provided in Section 113(f)(2)

of CERCLA, 42 U.S.C. S 9613(f)(2) and applicable state law.

Nothing in this Section shall constitute or be construed as

releasing or providing any Covenant Not to Sue or Contribution

Protection with respect to any matter addressed by this Decree to

any person or entity not a Defendant or to any Defendant which

has defaulted on its obligations under this Decree. Nothing in

this Section shall be deemed to waive any other right to

contribution protection that the Defendants may have.

B. Each Cash Defendant's right to contribution protection

under this Section shall remain in effect against all other

persons provided it has not defaulted on any obligation under

this Decree, whether or not any other Defendant has fully

performed its obligations under this Decree. Each Work

Defendant's right to contribution protection under this Section

shall remain in effect against all other persons provided Work

Third Partial Consant Deorea - l O t '

Page 100

lO Defendants have not defaulted on any obligation under this Decree

21 and that such Work Defendant has not defaulted on its obligations

31 arising out ot this Decree, whether or not any or all Cash

41 Defendants has fully performed its obligations under this Decree.

sl 6 ZZZI. DBnMDXMTS" KZOBT OF OOHTRIBUTIOH AND INDEMNITY

7 AMD COVENANT HOT TO SUB BACH OTHBR

8 A. Each Defendant shall retain all rights under statutory

9 or common law to seek contribution or indemnification against any

10 and all other persons or entities not party to this Decree.

11 B. Except as provided in this paragraph, to the extent

12 that any Defendant has complied with its obligations hereunder,

13 and, as among the Work Defendants only, with its obligations

14 under any separate agreement allocating the costs hereof, no

15 rights as to matters addressed in this Decree are retained

16 against such Defendant by any other Defendant and such rights are

17 hereby expressly waived, released and discharged with regard to

18 such Defendant. Each Cash Defendant specifically retains any and

19 all rights to seek indemnification from the Work Defendants as

201 provided in paragraph XX.D (page 63) of Section XX

21| (Indemnification and Insurance).

221 C. For and in consideration of the mutual covenants and

23 promises of the Defendants made herein and, as to the Work

24 Defendants only, in any separate agreement allocating the costs

25 hereof, each Defendant hereby covenants not to sue or otherwise

261 assert any claim against any other Defendant for reimbursement of

271 any payment made pursuant to this Decree, except to enforce any

281 allocation of costs made pursuant to such agreement.


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D. Nothing in this Consent Decree shall affect in any way

any rights or obligations by and among the Defendants under the

First Decree and the Second Decree.

ZZXII. WAIVER OF CLAIM-SPLITTIMa DBFBHBE

All Parties recognize and acknowledge that the settlement

embodied in this consent Decree is only a partial resolution of

Issues related to the remediation of conditions at the Site.

Defendants hereby waive the defenses of res judicata, collateral

estoppel, and claim-splitting by the Plaintiff, only with respect

to the Plaintiff's right to pursue subsequent litigation regard

ing Defendants' responsibility for phases of Site work and costs

not covered by this Consent Decree.

ZZZIIZ. COMMUNITY RELATIONS

The Work Defendants shall cooperate with EPA and the State

in providing information to the public. As requested by EPA or

the State, the Work Defendants shall participate in the

preparation of all appropriate information disseminated to the

public and in public meeting(s) which may be held or sponsored by

EPA or the State to explain activities at or concerning the Site

relative to the Work required under the terms of this Decree. As |

appropriate, EPA or the State may seek consultation with and

assistance from Work Defendants in the preparation of information

disseminated to the public and in public aeeting(s) which may be

held or sponsored by EPA or the State to explain activities at or

concerning the Site.

Third Partial Consant Daoraa

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ZZZIV. LOOaiMG AMD PUBLIC PARTICIPATION

A. As reguired by Section 122(d)(2) of CERCLA, 42 U.S.C.

S 9622(d)(2) and 28 C.F.R. S 50.7, this Consent Decree will be

lodged with the Court. The United States shall publish a notice

of availability of review to allow public comment prior to entry

by the Court.

B. The United States will provide persons who are not

Parties to the proposed settlement with the opportunity to file

written comments during a thirty (30) day period following such

notice. The United States will file with the court a copy of any

comments received and its responses to such comments.

C. The United States reserves the right to withdraw or

withhold its consent if the comments regarding the Consent Decree

disclose facts or considerations which indicate that the Consent

Decree is inappropriate, improper or inadequate, and therefore

that the Consent Decree should be modified as required by section

122(d)(2) of CERCLA, 42 U.S.C. S 9622(d)(2) and 28 C.F.R. S 50.7.

If a modification is deemed necessary by the United States based

on public comments, the United States will notify Defendants.

D. No Party shall be bound by modifications to this Decree

without its prior written consent, and consent to this Decree is

not consent to such modifications.

ZZXV. STATE AND LOCAL AOBHCY PARTICIPATION

A. Lejici Agency

EPA is and shall be the lead agency, as defined in the NCP,

for the activities within the scope of this Decree.

Third Partial Conaant Daore* page 103

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B. interaaencv Commttyeg

The Operating Industries Interagency Committee ("lAC") con- '\

sists of interested State and local agencies. The lAC meets on a

regular basis to exchange information on agency regulatory ac

tivities at the Operating Industries Site and reviews and com

ments on remedial and response actions undertaken at the site.

C. Role of Interagency Committee

The Work Defendants shall make available copies of all

significant deliverables developed pursuant to this Decree as

designated by EPA to the members of the lAC for review. EPA will

provide Work Defendants a current mailing list for lAC members

prior to the effective date of this Decree. Technical

representatives of Work Defendants, EPA and the lAC shall be

given the opportunity to review the deliverables. After the lAC

has had the opportunity to review the deliverables, it shall have

the opportunity to meet with EPA to discuss the deliverables and

prepare collaborative comments. These collaborative comments

shall be submitted to the Work Defendants as EPA comments. The

Work Defendants shall respond to the EPA comments as is reguired

by the terms of Section VII (Work to be Performed, page 17) and

subject to Work Defendants' right under Section XXII (Dispute

Resolution, page 69) of this Consent Decree.

D. consultation with State

EPA will consult with the State before approving any

significant deliverables required to be submitted by the Work

Defendants under this Decree. EPA will also consult with the

State before determining whether a force majeure event beyond the

control of the Work Defendants has occurred, and whether the Work


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1 Defendants have substantially conplied with or completed the

2 terms of this Decree. EPA's failure to consult with the State

3 will not relieve the Work Defendants of any obligation to comply

4 1 with the requirements of this Decree. If it is not practicable

51 for EPA to consult with the State, EPA shall notify the State of

6 its approval or detexiaination. The State's failure to object in

7 a timely manner to any approval, determination or other decision

8 of EPA made under this Decree shall constitute concurrence with

9 EPA.

10

11 ZZZVI. NOTICE TO TBE STATE

12 EPA has notified the state of California pursuant to the re-

13 quirements of Section 106(a) and 121(t)(l)(F) of CERCLA, 42

14 U.S.C. SS 9606(a) and 9621(f)(1)(F), and EPA has provided the

15 State with an opportunity to participate in negotiations and be a

16 party to this settlement.

17

IB ZZZVII. OTHER CLAIMS

19 Nothing in this Consent Decree shall be deemed to constitute

20 a preauthorizatlon of a CERCLA claim within the meaning of Sec-

21 tlons 111 or 112 of CERCLA or 40 C.F.R. S 300.25(d). In con-

22 sideration of the entry of this Consent Decree, Defendants agree

23 not to make any claims pursuant to Sections 111, 112 or 106(b)(2)

24 of CERCLA, 42 U.S.C. S§ 9611, 9612, 9606(b)(2), or any other

25 provision of law directly or indirectly against the Hazardous

26 Substance Superfund, or make other claims against the United

27 States or the State for those costs expended in connection with

28 this Consent Decree.


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XZXVIII. CONTINUING JURISDICTION

The Court specifically retains jurisdiction over both the

subject matter of and the Parties to this action for the duration

of this Consent Decree for the purposes of issuing such further

orders or directions as may be necessary or appropriate to con

strue, implement, modify, enforce, terminate, or reinstate the

terms of this Consent Decree or for any further relief as the in

terest of justice may require.

XXXIZ. REPRESENTATIVE AUTHORITY

A. Each undersigned representative of the Parties to this

Consent Decree certifies that he or she is fully authorized by

the Party to enter into and execute the terms and conditions of

this Consent Decree, and to legally bind such Party to this

Consent Decree.

B. Defendants shall Identify, on the attached signature

page, the name and address of an agent who is authorized to ac

cept service of process by mail on behalf of that Defendant with

respect to all matters arising under or relating to this Consent

Decree.

C. Notwithstanding the agents identified by Defendants

pursuant to the preceding paragraph XXXIX.B, Work Defendants

agree to accept service through their common counsel, in lieu of

individualized service of any pleading pertaining to this Consent

Decree on any other person:

David A. Giannotti, Esg. Kaye, Scholar, Fierman, Hays & Handler 1999 Avenue of the Stars, Suite 1600 Los Angeles, CA 90067

Third Partial consent Dacrae Page 106

D. Defendants hereby agree to accept service in the manner

set forth in this Section and to waive the formal service

requirements set forth in Rule 4 of the Federal Rules of civil

Procedure, including service of a summons, and any applicable

local rules of this Court.

ZL. EFFECTIVB DATB

This Consent Decree is effective upon the date of its entry

by the Court.

XLI. SEVERABILITY

If any provision or authority of this Consent Decree or the

application of this Consent Decree to any circumstance is held by

the Court to be invalid, the application of such provision to

other circumstances and the remainder of the Consent Decree shall

remain in force and shall not be affected thereby.

XLII. TBRMIHATIOM AND SATI8FACTIOH

A. 1. Upon completion of the Work to be performed

pursuant to this Decree, Work Defendants shall submit to EPA and

the State the Work Completion Report, which shall state that the

Work has been completed in accordance and in full compliance with

this Decree or that they have otherwise satisfied their

obligations in accordance and in full compliance with this

Decree, within sixty (60) days of receipt of the Work Completion

Report, EPA shall approve or disapprove the Work Completion

Report subject to the provisions of Section XXXV (State and Local

Agency Participation, page 103). If the Work Completion Report

Third Partial Consant Daoraa Page 107

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is disapproved, EPA may invoke the provisions of Section IX

(Additional Work, page 34) and paragraph VII.C.6 (on page 28) of

Section VII (Work To Be Performed) . Upon approval of the Work

Completion Report, Work Defendants' obligations for the Work

shall be deemed to be satisfied.

2. If Work Defendants perform an item of the Excluded

Work or any portion thereof. Work Defendants shall submit to EPA

an Excluded Work Completion Report for each item performed that

shall state that the Excluded Work has been completed in

accordance and in full compliance with this Decree. Within sixty

(60) days of receipt of the Excluded Work Completion Report, EPA

shall approve or disapprove the Report subject to the provisions

of Section XXXV (State and Local Agency Participation, page 103).

Upon approval of an Excluded Work Completion Report, Work

Defendants' obligation for that portion of Excluded Work shall be

deemed to be satisfied.

3. This Decree shall not terminate until EPA approval

of the completion of the Work and Excluded Work and EPA's

notification to the Work Defendants that both the Work and

Excluded Work have been satisfactorily completed. Upon such

notification by EPA, this Decree shall be terminated as to the

Work Defendants except for the provisions of Section XVI

(Retention of Records, page 48), Section XXIV (Covenants Not to

Sue, page 8 3 ) , Section XXVI (Reservation of Rights, page 9 3 ) ,

Section XXX (Contribution Protection, page loo), the completion

of any periodic review being conducted pursuant to paragraph X.A

(on page 35) of Section X (Periodic Review) , and such other

continuing rights and obligations of the Work Defendants under


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this Decree.

B. Upon full payment of all its obligations under Section

XVII (Reimbursement of Response Costs, page 51) and Exhibit c,

each Cash Defendant shall have satisfied its obligations for

Batters addressed under this Decree, and this Decree shall be

temlnated as to that cash Defendant, except for the provisions

of Section XVI (Retention of Records, page 48), Section XXVI

(Reservation of Rights, page 93), Section XXX (Contribution

Protection, page 100), Section XXIV (Covenants Not to Sue, page

83) and such other continuing rights and obligations of that Cash

Defendant under this Decree.

ZLIII. SECTION HEAOZHaB

The section headings set forth in this Consent Decree and

its Table of Contents are included for convenience of reference

only and shall be disregarded in the construction and interpreta

tion of any of the provisions of this Consent Decree.

ZLIV. COUNTBRPARTB

This Consent Decree nay be executed and delivered in any

number of counterparts, each of which when executed and delivered

shall be deemed to be an original, but such counterparts shall

together constitute one and the same document.

SIGNATURE PAGES NOT INCLUDED

pp. 118-298

Third Partial consent Decree - i n -

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Exhibit A:

Exhibit Bt

Exhibit Ct

Exhibit D:

Exhibit E:

Exhibit F;

EXHIBITS

Gas Migration Control and Landfill Cover Operable

Unit Record of Decision, Dated September 30, 1988

and Amendment, Dated September 28, 1990.

Scope of Work for the Gas Migration Control and

Landfill Cover Operable Unit.

List of Cash Defendants and payment schedule.

List of Work Defendants.

Third Partial Consent Decree 1991 Volumetric List.

List of Settling Subsidiaries, Divisions, and

Affiliated Entities.

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EXHIBIT 2

SFUND RECORDS CTR

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY ^"''''°'' \ . • ^ REGION IX

75 Hawthorne Street San Francisco, CA 94105-3901

Via Federal Express AirbiU #3422677613

Mr. Ken Hev lett Project Cooriiinator New CURE, Inc. 2550 Greenwood Avenue Monterey Park, CA 91755

Subject: Third Partial Consent Decree for the OH Site Thermal Destruction Facility Item of Excluded Work Fourth Partial Consent Decree for the OII Site

Dear Mr. Hewlett:

Under the terms of Section VIII.E. 1 of the Fourth Partial Consent Decree, and Section VIII.E of the Third Partial Consent Decree, "sufficient funds'* are available in the CD-3 Cash Escrow Account to provide payment to the CD-3 Work Defendants for up to the first $6 million of work costs incurred by the CD-3 Work Defendants for the TDF item of Excluded Work. Pursuant to the terms of Section VIII.C. of the Third Partial Consent Decree (CD-3), EPA hereby requests that the CD-3 Work Defendants perform the Thermal Destruction Facility (TDF) item of Excluded Work.

As provided in CD-3, the TDF item of Excluded Work shall be considered Work under CD-3 and the CD-3 Work Defendants shali be responsible for attaining Performance Standards pertaining to the TDF.

As we have discussed, it may be possible for the Work Defendants to satisfy the requirements for the submittal of management plans for the TDF work by amending existing CD-3 management plans instead of developing new management plans. EPA suggests that this approach may be more cost-effective and result in reduced administrative burdens for all parties. I would be happy to discuss this possibility with you at our earliest mutual convenience.

EPA is currently completing a report entitled Evaluation of Candidate Locations for the Planned Thermal Destruction Facility at the OII Landfill Superfund Site. This report will be sent to you for your information and use later this month. The report will also be provided to the Oil Interagency Committee and to the public information repositories at that time.

Primed on Recycled Paper

Letter: Hewlett June 2,1995

Page 2

EPA looks forward to assisting you in expediting the design and construction of this facility. If you have any questions, please feel free to call me.

Sincerely,

oy Herzig, i? Roy Herzig, EPA Project Coordinator - OH Site Third Partial Consent Decree

cc: Project Co-Chairmen c/o Boone & Associates David A. Giannotti, Esq. ! Scott Brown, Environmental Solutions, Inc. ' OII Project Coordinator (First Partial Consent Decree), CURE, Inc. o n Project Coordinator, CAL EPA DTSC

iÂssistant Regional Counsel - OH Site, EPA j OU Project Coordinator (First Partial Consent Decree), EPA \ Jill Bensen, CH2M HUl

OII Project Coordinator (Fourth Partial Consent Decree), Boone & Assoc. OII Project Coordinator (Fourth Partial Consent Decree), EPA j Robert Brook, U.S. DOJ j

Jim Stambolis, Chevron Rajeev Sane, UNOCAL

OII Inter-Agency Committee: Bookman-Edmonston Engineering, Tom Regan CA DOJ, Attorney General's Office, David Eissler CA Integrated Waste Management Board, Darryl Petker CA Regional Water Quality Control Board, Rod Nelson Cahfomia Department of Justice, Dennis A. Ragen Califomia Department of Transportation, Ralph Thunstrom Califomia Division of Oil And Gas, Ed Brannon City of Montebello, Clark Siegmeyer City of Monterey Park, City Engineer City of Monterey Park, City Manager City of Monterey Park, Mayor County Sanitation Districts of Los Angeles County, Robert Miele, Ann Heil LA County DHS, SWM, BEP, Richard Hanson LA County DPW, Waste Management Division, Mert Ramos Los Angeles County Counsel, Judith Fries SCAQMD, Brian Choe

EXHIBIT 3

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION IX

75 Hawthorne Street San Francisco, CA 94105

SEP 2 7 2007

Mary Esper, President New Cure Inc. 2550 Greenwood Ave. Monterey Park, Califomia 91755

CERTIFIED MAIL NO. 7006 0810 0003 9305 8819 RETURN RECEIPT REQUESTED


David A. Gianotti, Esq. David A. Gianotti, A professional Corporation 1925 Century Park East, Suite 950 Los Angeles, Califomia 90067

Re: REQUEST FOR PAYMENT OF EPA COSTS Operating Industries, Inc. Superfund Site 58, (2T, 2S) Monterey Park, Califomia

Dear Ms. Esper and Mr. Gianotti:

This letter serves to request payment from the "Work Defendants" to the Third Partial Consent Decree, No. CV 91-6520 JGD (WRX) ("CD-3"; Caption page attached) for $507,419.46 in oversight costs incurred by the United States Environmental Protection Agency ("EPA") at the Operating Industries, Inc. Landfill Site ("Site") in Monterey Park, Califomia. This request is made pursuant to CD-3, Paragraphs V.S, XVII.C and XVII.E. Paragraph V.S. defines the term "Future Oversight Costs" to include all costs incurred by "EPA....in oversight of the Work and Excluded Work." Paragraph XVII.C, "Reimbursement of Response Costs;" "United State's Future Oversight Costs'," obligates the "Work Defendants" to reimburse EPA for the first $16 million of oversight costs, and all such costs over $21 million, related to the CD-3 "Work" and the item of "Excluded Work" referred to as the "Cover Protection Component of the Cover System for the North Slope of the South Parcel."

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Finally, Paragraph XVII.E, "Future Costs of Work or Excluded Work," requires the Work Defendants to pay all costs over $6 million incurred for each such item [of Excluded Work]." According to EPA's records the Work Defendants to date have paid $9,088,377.62 in oversight costs, and therefore are required to pay EPA for its documented oversight costs. In addition, based on a letter from Ian Webster, dated January 12, 2006, EPA believes the $6 million cost threshold was reached in relation to the 'Thermal Destmction Facility" item of Excluded Work in November 2005, and the Work Defendants therefore are now obligated to pay EPA's oversight costs in relation to this item of Excluded Work.

Two cost summaries are enclosed with this letter to document the $507,419.46 in costs incurred by EPA as required by CD-3, Paragraph XVII.C., as well as the narrative descriptions of the work performed by the U.S Army Corps of Engineers for the period of time covered by this billing. The Cost summary for account number "1X58" covers the time period from July 1, 2005 through June 30, 2007 and reports EPA's costs for oversight of the CD-3 Work (which includes the "Cover Protection Component of the Cover System for the North Slope of the South Parcel" item of excluded work.) (The summary for 1X58 includes the period which was billed last year, so the Work Defendant's payment of $56,374.44 received on October 11, 2006 has been deducted from the total amount now due.) The cost summary for account number "3X58" covers the time period from December 1, 2005 through June 30, 2007 and reports EPA's costs for oversight of the Thermal Destmction Facility. EPA reserves the right to request payment in the future for any additional costs for the time periods covered by the enclosed cost summaries which are not included in the current billing.

As provided in CD-3, Paragraph XVII.C, the Work Defendants must make the requested payment within thirty (30) calendar days of the date of receipt of the enclosed cost summaries. You may choose to make the payment of $507,419.46 either by means of an electronic funds transfer or by remitting a check in this amount. If you choose to pay by means of an electronic funds transfer the payment must be transmitted in accordance with the enclosed instmctions. If you choose to pay by check, the check must be made payable to the "U.S. EPA Hazardous Substance Superfund." The check and the required accompanying transmittal letter must clearly reference the identity of the Site ("Operating Industries, SSED #2T"). Please note that there is a new address for payments, payments should now be sent to::

U S. Environmental Protection Agency Region 9 Superfund payments Cincinnati Finance Center P O. Box 979076 St. Louis, MO 63197-9000

Please also send a copy of the check and the transmittal letter, and direct any questions you may have concerning this billing, to Greg Pennington at:

U.S. Environmental Protection Agency, Region IX 75 Hawthorne Street (SFD-7-5) San Francisco, CA 94105 (415)972-3120

If you have any legal questions regarding this matter please contact Eric A. Esler at:

U. S. Environmental Protection Agency, Region IX Office of Regional Counsel, ORC-3 75 Hawthorne Street San Francisco, CA 94105 (415) 972-3947

In accordance with Section 107(a) of CERCLA, if payment is not received within thirty (30) days of receipt of this notice, interest on past costs incurred shall accme from the date of receipt of this request for payment while interest on future costs shall accme from the date of expenditure. Interest rates are variable. The rate applicable on any unpaid amounts for any fiscal year is the same as is specified for interest on investments of the Hazardous Substance Superfund which is determined by the Department of the Treasury. The current rate of interest is 5.02% per annum.

Thank you for your past cooperation with EPA and your attention to this matter.

. Sincerely,

Frederick K. Schauffler ^ Chief, Site Cleanup Section 4 Site Cleanup Branch Superfund Division

Enclosures

» »

-4

BILLING SUMMARY

COST SUMMARY FOR 09K1X58/09-092T 7/1/2005 THROUGH 6/30/2007 $357,253.17

COST SUMMARY FOR 09K3X58/09-092S 12/1/2005 THROUGH 6/30/2007 -I- $206.540.73

TOTAL OF TWO SUMMARIES $563,793.90

LESS LAST YEAR'S PAYMENT MADE 10/11/06 - $ 56.374.44

TOTAL NOW DUE $507,419.46

EXHIBIT 4

November 14, 2007 NEW CURE, INC.

Fred Schauffler, Chief Cleanup Section 4, Site Cleanup Branch Superfund Division U.S. Environmental Protection Agency, Region IX 75 Hawthome Street, M/S SFD-4 San Francisco, CA 94105

NCIEPA-L-1157

Subject: Request for Payment of CD-3 EPA Oversight Costs - OII Site

Dear Fred:

We are in receipt of your letter dated September 27,2007 (received on October 15) requesting $507,419.46 payment of oversight costs incurred by EPA at the OII Landfill Site pursuant to CD-3. Upon examination of the Itemized Cost Summary, we note that the amount billed by the Army Corps of Engineers ($234,262.12) does not include backup describing the CD-3 services performed. Therefore, we request additional documentation for these costs.

Pursuant to CD-3 Section XVII.C. (p54) and Section XVIII.D. (p.58), the Work Defendants were required only to pay EPA oversight costs for the North Slope of the South Parcel Excluded Work, but are not required to pay EPA oversight costs for oversight costs for either the North Parcel or the TDF items of Excluded Work. Based on discussions between Eric Esler and David Giannotti, we will withhold payment of the TDF amount, and expect fiirther discussions between Eric and David will resolve this issue.

Per our letter dated September 29, 2006 requesting additional information for the disputed portion of the Army Corps of Engineers cost of ($119,138.11) we have no record of receiving any information, therefore, the amount of $119,138.11 will be deducted tmtil the information is received.

2550 Greenwood Avenue » Monterey Paric, Califomia 91755 - 323-720-9775 FAX 323-720-9905

The remaining undisputed costs ($122,991.05) will be paid by November 15, 2007.

Very tmly yours,

Mary Esper ! ) *J President/Project Coordinator

ME:djr

cc: David Hirsch, New Cure Chairman of the Board David Giannotti, Counsel for New Cure, Inc. Eric Esler, Counsel for EPA Glenn Anderson, Member of New Cure Board

EXHIBIT 5



CERTIFIED MAIL NO. 7006 0810 0003 9306 4421 SEP 3 0 2008 RETURN RECEIPT REQUESTED

Mary Esper, President New Cure Inc. 2550 Greenwood Ave. Monterey Park, Califomia 91755


David A. Giannotti, Esq. DAVID A. GIANNOTTI, P.C. 425 North Maple Drive Suite 205 Beverly Hills, Califomia 90210

Re: REQUEST FOR PAYMENT OF EPA COSTS Operating Industries, Inc. Superfund Site 58, (2T, 2S) Monterey Park, Califomia

t

Dear Ms. Esper and Mr. Gianotti:

This letter serves to request payment from the "Work Defendants" to the Third Partial Consent Decree, No. CV 91-6520 JGD (WRX) ("CD-3"; Caption page attached) for $474,691.12 in Oversight costs incurred by the United States Environmental Protection Agency ("EPA") at the Operating Industries, Inc. Landfill Site ("Site") in Monterey Park, Califomia. This request is made pursuant to CD-3, Paragraphs V.S, VIE.D, and XVH.C.l.

Paragraph V.S. defines the term "Future Oversight Costs" to include all costs incurred by "EPA....in oversight of the Work and Excluded Work." Paragraph VIII.D provides, in relevant part, that "if Work Defendants perfomi an item(s) or portion of Excluded Work, all references in this Decree to Work shall be read to apply to that item(s) or portion of Excluded Work . . . ." As you know, the Work Defendants have and are performing all items of the CD-3 Excluded Work. Finally, Paragraph XVH.C.l obligates the Work Defendants to reimburse EPA "for the Oversight costs incurred by the United States under this Decree for Work." This last obligation extends to the first $16 million of the United States' Oversight costs for CD-3 Work, and all such costs over $21 million. According to EPA's records the Work Defendants to date have paid $9,394,565.09 in Oversight costs, and therefore are required to pay EPA for its documented Oversight costs.

Two cost summaries are enclosed with this letter to document the $265,802.39 in costs incurred by EPA as required by CD-3, Paragraph XVII.C. Additionally, the narrative descriptions of the work performed by the U.S Army Corps of Engineers for the period of time covered by this billing and the financial back-up documentation are also enclosed.

The Cost summary for account number "1X58" covers the time period from July 1, 2007 through June 30, 2008 and reports EPA's costs for Oversight of the CD-3 Work (which includes the "Cover Protection Component of the Cover System for the North Slope of the South Parcel" item of excluded work). The cost summary for account number "3X58" also covers the time period from July 1, 2007 through June 30, 2008 and reports EPA's costs for Oversight of the Thermal Destmction Facility. EPA reserves the right to request payment in the future for any additional costs which are not included in the current billing, including ail CD-3 Work and Excluded Work Oversight costs

Additionally the requested total of $474,691.12 includes $201,231.99 not yet paid from last year's billing letter and $7,656.74 in accmed interest on the unpaid amount through September 30, 2008. The total of last year's billing was $507,419.46 and two payments have been received to date: 1) $122,991.05 paid on 11/15/07; and 2) $183,196.42 paid on 9/16/08.

As provided in CD-3, Paragraph XVn.C, the Work Defendants must make the requested payment within thirty (30) calendar days of the date of receipt of the enclosed cost summaries. You may choose to make the payment of $474,691.12 either by means of an electronic funds transfer or by remitting a check in this amount. If you choose to pay by means of an electronic funds transfer the payment must be transmitted in accordance with the enclosed instmctions. If you choose to pay by check, the check must be made payable to the "U.S. EPA Hazardous Substance Superfund." The check and the required accompanying transmittal letter must clearly reference the identity of the Site ("Operating Industries, SSID #2T"). Please note that there is a new address for payments, payments should now be sent to:

U S. Environmental Protection Agency Region 9 Superfund payments Cincinnati Finance Center P O. Box 979076 St. Louis, MO 63197-9000

Please also send a copy of the check and the transmittal letter, and direct any questions you may have concerning this billing, to Greg Pennington at:

U.S. Environmental Protection Agency, Region DC 75 Hawthome Street (SFD-7-5) San Francisco, CA 94105 (415)972^3120

If you have any legal questions regarding this matter please contact Thomas Butler at:

U. S. Environmental Protection Agency, Region IX Office of Regional Counsel, ORC-3 75 Hawthome Street San Francisco, CA 94105 (415)972-3869

In accordance with Section 107(a) of CERCLA, if payment is not received within thirty (30) days of receipt of this notice, interest on past costs incurred shall accme from the date of receipt of this request for payment while interest on future costs shall accme from the date of expenditure. Interest rates are variable. The rate applicable on any unpaid amounts for any fiscal year is the same as is specified for interest on investments of the Hazardous Substance Superfund which is determined by the Department of the Treasury. The current rate of interest is 2.15% per annum.

Thank you for your past cooperation with EPA and your attention to this matter.

Sincerely,

C2^(Sj2u.di^.

Frederick K. Schauffler Chief, Site Cleanup Section 1 Califomia Site Cleanup Branch Superfund Division

Enclosures

EXHIBIT 6

NEW CURE, INC.

November 5,2008

Fred Schauffler, Chief Cleanup Section 4, Site Cleanup Branch Superfund Division U.S. Environmental Protection Agency, Region IX 75 Hawthome Street San Francisco, CA 94105-3901 NCIEPA-L-1256

Subj ect: Request for Payment of CD-3 EPA Oversight Costs - OH Site

Dear Mr. Schauffler:

We are in receipt of your letter dated Septeriiber 30,2008 (received October 6, 2008) requesting $474,691.12 payment of oversight costs incurred by EPA at the OH Landfill Site pursuant to CD-3, summarized as follows:

CD-3 Work: $155,734.87 TDF Oversight; $110,067.52 Previously Unpaid Amount: $201,231.99 Interest on Unpaid Amount: $ 7.656.74

Sum: $474,691.12

Consistent with CD-3 Section XVH.C. (p54) and Section XVm.D. (p.58), the Work Defendants are not required to pay EPA oversight costs for oversight costs for Excluded Work items except for the North Slope of the South Parcel, which was completed several years ago. Therefore, we are withholding payment for the billed TDF oversight amoimt of $110,067.52. Likewise, we are not paying the previously unpaid amount of $201,231.99 and associated interest of $7,656.74 for previously billed TDF charges. Based on discussions between EPA and the Work Defendants over the past several months, we will withhold payment of the TDF amount pending receipt of a memo fi-om EPA that is to support EPA's interpretation, and expect further discussions.

2550 Greenwood Avenue o Monterey Park, Califomia 91755 a 323-720-9775 FAX 323-720-9905

NCIEPA-L-1256 November 5, 2008 Page 2

We are processing payment by wire transfer today for the CD-3 Work charges of $155,734.87. If you have any questions, please call me at 323-720-9775.

Very Tmly Yours,

Mary Espet, ME. President/Project Coordinator

ME:djr

cc: Glenn Anderson, New Cure Chairman of the Board David Giaimotti, Coimsel for New Cure, Inc. David Hirsch, Member of the New Cure Board Chris Lichens, Project Coordinator for EPA Janet Magnuson, Counsel for EPA

EXHIBIT 7

* !r% UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX 75 Hawthorne Street

San Francisco, CA 94105

Mail Stop: SFD-7-1 Phone:(415)972.3174

Fax:(415)947-3526 E-Mail: [email protected]

December 5, 2008

Via Mail and E-Mail

David A. Giannotti, Esq. David A. Giannotti, P.C. 425 N. Maple Drive Suite 205 Beveriy Hills, CA 90210 E-Mail: [email protected]

Mary Esper President/Project Coordinator New Cure, Inc. 2250 Greenwood Avenue Monterey Park, CA 91755 E-Mail: [email protected]

Re: Oversight Costs at the Operating Industries, Inc. ("OH") Superfund Site

Dear Mr. Giannotti and Ms. Esper:

As you know, on September 27, 2007 and on September 30, 2008, the United States Environmental Protection Agency ("EPA") sent to New Cure, Inc. ("NCI"), acting as the agent for your clients, the Operating Industries, Inc. ("OH") Work Defendants, bills for the EPA's Oversight costs, related to the Work and Excluded Work being performed by your clients, through NCI, pursuant to Oil's Third Partial Consent Decree ("CD-3"), as those terms are defined therein. In letters dated November 14, 2007, and November 5, 2008, NCI's President, Mary Esper, indicated that your clients refused to pay that portion of the EPA's Oversight costs related to the Thermal Destruction Facility ("TDF"). By this letter, the EPA is formally demanding payment of those Oversight costs.

The EPA believes that CD-3's provisions are clear, when read as a whole, that the Work Defendants are obligated to reimburse the EPA for its TDF and North Parcel ("NP") Oversight costs. Paragraph Vin.D of CD-3 provides, in relevant part, that "if Work Defendants perform an item(s) or portion of Excluded Work, all references in this Decree to Work shall be read to apply to that item(s) or portion of Excluded Work . . .." Paragraph XVH.C.l of CD-3 goes on to define the scope of the Work Defendants' responsibility to pay EPA's CD-3-related Oversight

mailto:[email protected]



Mr. David A. Giannotti/Ms. Mary Esper December 5, 2008 Page 2

costs. This latter provision, for its part, states that "Work Defendants shall reimburse EPA's Hazardous Substance Superfund for the oversight costs incurred by the United States under this Decree for Work ...."

Considered together, as required by Paragraph VIII.D, Paragraphs VIII.D and XVII.C make clear that the reference to "Work" in Paragraph XVH.C.l must be read to refer to the TDF and NP Excluded Work items if, and to the extent that, they are performed by the Work Defendants. Stated differently, adherence to Paragraph VIH.D's requirements means that Paragraph XVH.C.l must be read as though it says: "Work Defendants shall reimburse EPA for Oversight costs in relation to Work and, by virtue of Paragraph VHI.D, each item of Excluded Work, to the extent performed by the Work Defendants." As the Work Defendants have performed or are performing the TDF and NP Excluded Work items. Paragraph XVH.C.l's reference to the Work Defendants' obligation to pay EPA's Oversight costs for "Work" must also be read to refer to EPA's Oversight costs for the TDF and NP Excluded Work items.

In verbal communications with Eric Esler of EPA's Office of Regional Counsel, you have made clear that your clients believe Paragraph XVII.C.I's specific reference to the Work Defendants' obligations to pay Oversight costs for the CD-3 Excluded Work on the North Slope of the South Parcel ("NSSP"), and corresponding lack of reference to CD-3's TDF and Excluded Work items, indicate that CD-3 did not contemplate that the Work Defendants would pay EPA's Oversight costs for the latter two items of Excluded Work. EPA disagrees.

The character of the work associated with the different elements of CD-3's Excluded Work explains the referential disparity in Paragraph XVII.C. 1. The express reference to NSSP Oversight costs was included to address EPA's concem that it would be extremely difficult, if not impossible, to track EPA's NSSP Oversight costs separately from its CD-3 Work Oversight costs because implementation of those two elements of the remedial action would be so closely interwoven. EPA therefore negotiated for the inclusion of a separate, express reference to NSSP Oversight costs in Paragraph XVH.C.l to make clear that the Work Defendants were responsible for these costs regardless of whether they performed the NSSP Excluded Work. This requirement made it unnecessary to track the NSSP Oversight costs separately in the event that a party other than the Work Defendants performed the NSSP Excluded Work item.

By contrast to the situation with the NSSP Oversight costs, EPA was not concemed about segregating the TDF and NP Oversight costs from CD-3 Work Oversight costs because the TDF and NP Excluded Work items are discrete projects from the CD-3 Work. Had EPA asked another party to perform the TDF and/or North Parcel Excluded Work items, EPA readily could have tracked and sought recovery of its TDF and/or NP Oversight costs from' that other party or, if that failed, could have recovered its TDF and/or NP Oversight costs from the CD-3 Cash Escrow Account pursuant to Paragraph XVIH.D. As there was no need to ensure that the Work Defendants would pay the TDF and/or NP Oversight costs regardless of who performed the work, there was also no need to reference these costs separately in Paragraph XVH.C.l. If

Mr. David A. Giannotti/Ms. Mary Esper December 5, 2008 Page 3

another party performed the TDF and/or NP Excluded Work, that party would pay the Oversight costs associated with those items of Excluded Work. If the Work Defendants performed them, they would be treated as Work pursuant to Paragraph VHI.D, and the Work Defendants would pay them.

Based on the interpretation and understanding of CD-3 presented above, the EPA hereby disagrees with the OH Work Defendants' refusal to pay EPA's TDF Oversight costs and demands remittance of payment within 30 days of receipt of this letter. As set forth in the letters dated September 27, 2007 and September 30, 2008, the EPA's unreimbursed Oversight costs are $311,299.51 plus interest. If the Work Defendants disagree, they have the opportunity to invoke dispute resolution pursuant to Paragraph XXH of CD-3.

If you have any questions or concerns related to this demand, please do not hesitate to contact me or Janet Magnuson, Assistant Regional Counsel, at 415-972-3887.

Sincerely,

Frederick K. Schauffler Chief, Califomia Site Cleanup Section I Superfund Division

cc: Chris Lichens Janet Magnuson Shiann-Jang Chem Greg Pennington Glenn Anderson

EXHIBIT 8

\ 2 ! S / UNITED STAtES ENVIRONMENTAL PROTECTION AQENCY

\ ^<î^ REQ\OH IX

76 Hawthorn© GUoot San Francleco, Ca. 0410S

18 January I99i

CONFIDENTIAL : SETTLEMENT NEGOTIATIONS

Via Telefax

David Giannotti, Esq. Kay®/ Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Suite 1600 LipB Angeles, California 90067

Re: Operating Industries inc. Superfund Site Negotiations for thg Gas and Cover Ot>erable Unit

Dear David:

As a result of our continuing discussions, we are willing to propose the following structure for settlement. We believe that this proposal addresses your concerns that the Steering committee not be responsible for 100% of the- remedy and that others participate as well.

Under this proposal EPA agrees to assuine responsibility for a substantial portion of the work, from which the Steering Committee defendants are released. Since there are few significant viable parties who are not represented by the Steering Conmittee, EPA is thereby assuming a substantial risk that the costs of these portions of the work will be borne by the Agency itself. As a result, this proposal is structured to provide an incentive for other parties to participate.

For this reason, it is important that the Steering Coimnittee understand that this offer sets forth our best opportunity to reach a consensus for settlenent. As a way to reach a settlement that meets the oil Steering committee's concerns and that does not present an unacceptable level of risk to the government, v/e have excluded entirely from this settlement any agreement for operations and maintenance (O&M) for year 6 to,the future. This O&M will be addressed at the tiae of final site remedy.

Prlnttd on Recycled Paptf

David Giannotti 18 January 1991 Page 2

The OII Steering Committee defendants will agree to:

- Design and construct the selected remedy for the entire south Parcel, with certain excluded matters, and to negotiate with EPA for appropriate language in the SOW concerning the NSSP. The excluded matters are the design and conetruction of a thermal destruction facility and the provision of the materials for vegetative soil layer.

- Meet all performance standards.

- Conduct South Parcel O&M for the years of construction and for three years after attainment of performance standards.

- Pay Jill EPA oversight costs during the design and C(^nstruction and five years of the O&M.

- Cooperate with EPA to develop a Cash Escrow fund from non-steering Committee members and pay $20 million to that fund.

- Cooperate with EPA for the inclusion of non-Steering Committee members on a cash basis into this settlement.

- Agree to perform O&M for years 4-5 if EPA determines that rhe use of funds from the account is appropriate for tJiat tasK.

EPA will agree to covenant not to sue the settling defendants for the following matters, subject to any appropriate reopeners:

- The design and construction of the South Parcel systems^ including the excluded matters and all other work or materials performed pursuant to any administrative order.

- The design and construction of the North Parcel systems.

- The operatioi^s and maintenance of both systems for the five year period after attaining performance standards.

- state and Federal past costs.

- EPA oversight for period of design, construction and five years operations and maintenance.

EPA and the Steering Committee will agree that the Cash Escrow account funds may be used, at EPA discretion, for:

-. state and Federal past costs.

David Giannotti 18 January 1991 Page 3

- Work or materials at the site to be provided by EPA, including but not limited to the thermal destruction facility, vegetative soil layer.

- other work or materials including but not limited to synthetic materials for cover.

- North parcel design, construction'end maintenance.

- Other site remediation including operations and maintenance.

I As I am sure you are aware, the moratorium period will shortly come to an end. We hope we may reach an agreement on the above, so that we may turn to negotiation of the Consent Decree language in the near future. We look forward to your response and to meeting with you on January 2l3t to discuss these matters.

Very truly yours,

Katherine L. Shine Assistant Regional Counsel

cc: Dennis Ragen (CA) Robert Brook (DOJ)

EXHIBIT 9

i ^ J CD-3 Draft dated 17 April 1991 - Page 55.pdf - Adobe Reader \ •°^#' David A. Giannotti to: Janet Magnuson, Thomas Butler 01/28/2009 07:39 AM

Vvwc Cc: "Shelby/Theresa Moore"

Here is a redline of the future response cost provision that added the NSSP EW oversight costs.

CD-3 Draft dated 17 April 1991 - Page 55.pdf

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

C. United States' Future Oversight Costs

1. Work Defendants sha l l reimburse EPA's Hazardous

Substance Superfund for the oversight, costs incurred by^ the

United States under t h i s DecreaA, including the costs incurred by

the United Sta tes in oversight of the a c t i v i t i e s performed

pursuant to paragraph VIII .A.l ( i i i ^ ^ p i p i i ^ f f i l ^ p p p i l i i P

Cover system for the North Slope of the South Parcel, on page 29)

of Section VIII (Excluded Work).

<: i-|i *ef sThese paymcnto j !^v;^f%|^^6at^ |shal l be »ade-]^6idp3y

cer t i f i ed check within t h i r t y (30) days of receipt ofiJihî^^li:^ JW*>r>:Jj:S>:^^:iK'-S''^^.^-*Sfr'ft'" . .,,..„.„.ii demand for payment. Work Defendants shall pay the

first $16 million of such costs and all such costs over $21

million- The United States will bill for oversight on a periodic

basis, no more frequently than annually. Nothing in this

paragraph shall affect EPA's right to reimbursement of its

oversight costs from any other person not a signatory to this

Decree.

2. The check(s) shall be made payable to "EPA

Hazardous Substance Superfund," and shall reference the

"Operating Industries Superfund Site." Defendants shall forward

the certified check(s); to:

24B U.S. Environmental Protection Agency, Region ATTENTION: Superfund Accounting

251 P. O. Box 360863M Pittsburgh, PA 15251

26

27

28

Q K

3. A copy pf all transmittal letters and a copy of

all checks shall be sent to the EPA and the Department of Justice

17 April 1991, 6:58 pm \ Draft Third Partial Consent Decree, Page 55

EXHIBIT 10

2023707



April 27, 2004

Mr. Robert Butler Vice Chair - NCI Board of Directors C/o New Cure, Inc. 2550 Greenwood Avenue Monterey Park, Califomia 91755

Subject: North Parcel Redevelopment and Remediation North Parcel Item of Excluded Work Under Third Partial Consent Decree Operating Industries, Inc., Superfund Site

Dear Mr. Butler:

I am writing this letter to summarize the status of our discussions regarding the Operating Industries, Inc. ("Oil") Superfund Site. I am also fulfilling our commitment to you and to the City of Monterey Park ("City") to initiate remediation work for the North Parcel of the Oil Site, in conjunction with your stated commitment to integrate that remedial work with preparations for development of the North Parcel.

For the better part of a year, EPA has been focused on its twin goals of cleaning up the North Parcel, and effectively integrating that work with the efforts of the City to redevelop the North Parcel. We have attempted to accomplish these goals through intensive discussions with the o n Site Custodial Trust ("the Trust") and with representatives of the potentially responsible parties at the OH Site (the "Work Defendants").

In December 2003, we held a conference call and came to agreement on several issues that formed the basis for the Work Defendants to move forward with integrating remediation and redevelopment of the North Parcel. Elizabeth Adams documented these agreements and the proposed course of action in a letter dated December 19, 2003. Since that time, we have been negotiating the details of these agreements and EPA has worked very hard to satisfy the many concerns of the Work Defendants and the Trust.

In early April, EPA believed that negotiations were nearly concluded. On April 14, 2004, EPA made a proposal to the Work Defendants to resolve the outstanding issues. EPA's proposal addressed every point under discussion and reflected our major financial concessions, including

the distribution to the Work Defendants of the bulk of the anticipated proceeds of sale from the North Parcel. In an effort to resolve the last few issues raised by the Work Defendants EPA proposed an additional financial incentive to cover any other potential costs that may relate to the sale of the North Parcel.

On April 19, EPA attended a meeting hosted by the City and the Work Defendants. The Work Defendants in that meeting did not respond to EPA's offer, but instead announced their decision to "change course." The Work Defendants withdrew from negotiations and described a three-point plan that they said would accelerate the resolution of the issues. As EPA understood it, the Work Defendants proposed to: (1) Move quickly to resolve the pending litigation; (2) Ask EPA to issue a letter requiring the CD-3 Work Defendants to initiate the North Parcel work, while continuing to work with Home Depot and the City to voluntarily integrate remediation and redevelopment; and (3) Initiate the dispute resolution process with EPA under the terms of CD-8, to assert the Work Defendants' position on the appropriate distribution of the proceeds of sale.

EPA understood the Work Defendants to commit unequivocally to integrate the CD-3 North Parcel Excluded Work with the City's redevelopment effort. In response to the request of the Work Defendants, EPA committed to the Work Defendants and the City to issue a letter initiating the CD-3 North Parcel Excluded Work item within two weeks, or no later than May 3, 2004.

On April 23, EPA and the Work Defendants held a telephone conference to further discuss the Work Defendants' new three-point plan. In this telephone call, EPA heard a different explanation of the Work Defendants' position. Contrary to what we heard on April 19, you indicated that integrating the remediation of the North Parcel with redevelopment would be contingent on a resolution of the allocation of proceeds from the sale of the property. We are awaiting a fuller written explanation of the Work Defendants' position on this point, which you promised to provide next week. However, in this telephone conference the Work Defendants again expressed their willingness to proceed with the North Parcel work as CD-3 Excluded Work under a letter to be issued by EPA.

Accordingly, by this letter, EPA is fulfilling its commitment to require the implementation of the CD-3 North Parcel Excluded Work. Under the terms of Section Vin.E of the Third Partial Consent Decree, "sufficient funds" are available in the CD-3 Cash Escrow Account to provide payment to the CD-3 Work Defendants for up to the first $6 million of work costs incurred by the CD-3 Work Defendants for the North Parcel item of Excluded Work. Pursuant to the terms of Section VIII.C. of the Third Partial Consent Decree (CD-3), EPA hereby requests that the CD-3 Work Defendants perform the North Parcel item of Excluded Work.

As provided in CD-3, the North Parcel item of Excluded Work shall be considered Work under CD-3 and the CD-3 Work Defendants shall be responsible for attaining Performance Standards pertaining to the North Parcel.

EPA strongly encourages the Work Defendants to fulfill their commitment to the City and EPA to integrate the redevelopment into the remediation design.

Sincerely,

î^T^â^ Keith Takata Director, Superfund Division

cc: David Hirsh, Oil Trust Shelby H. Moore, Jr., David A. Giannotti, Esq. Chris Jeffers, City of Monterey Park

EXHIBIT 11

SSi UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX

75 Hawthome Street

San Francisco, CA 94105-3901

REC-

NOV G 9 2G06

Da\'id .A. Giannoili. Esq. Offices ol' Da\'id .A. Giannoili Watt Plaza 192. Cenuiry Park Ea.si. Suite 9. 0 l.os .Angeles, Caliromia 90067

.SUBJ: Operating Indusliics, inc. .Supcifund .Silt; - LcUer ,-\grecnien( Regarding Certain Paymenv.s lo the Work Dereiidanl.s Puistu-ini lo the Eighth Panial Conbeni Decree

Dear Mv. Giannoui:

1 write to set forth the agreement beuveen the U.S. Environmenial Protection .Agency (•••EP.A'") and, colieciivciy and individually, the Work Defendanis to ihe Eighth Partial Coniicni Decree lor the Operating Indu.'iines. Inc. .Superi'und Site a.s tliis term i.s defined m the Decree ("\he CD-8 Work DefeTKlants"). coneeming tlie allocation and disburscmenl. pursuunl io ihe !:ighlh P:ijliul Con:;ent Decree ("CD-S") lor liic Operating Industries, Inc. .Superfund Site ('"On' or '\Sitc") of certain funds related to the Site." as more specifically described herein.

1. Baekaound

Tlic i90-acre Site is a former landfill located approximately 10 miles east of downtown Los Angeles in Monterey Park. Califomia. The liindfill is divided into a 4.5-acrc northern parcel ('"Nonh Parcer') and a 1-1.5-acre soulhern parcel ("'.South Parcel") by tlie Pomona Freeway, a major commuter highway. The Seventh Partial Consent Decree for Oil ('•CD-7") provided ihai Greenrieid Monterey Park. LLC ("Greenliekf'). a brownfields development company, would remediate a ponion of the Nf)rlh Parcel designated as the 'TJe\elopmenl ParceF' in CD-7. This rcrne.diauon was condiiioned on Gvcenfield purchasing liie Developmoni Parcel by Octolicv 31, 2002. Greenfield did not complete the purchase of the Development Parcel by the deadline, and ihe remcdiaiion and rcdcvelopineni by Greenfield will not proceed as anticipated in CD-7.

'Paragraph XTX.S.2.(.3) oi CD-S provides, in rclevum pan, thai •'ihe amounts deposited I in the Fifth Panial Con.seni Decree Cash Escrow .Accouril (''CD-.^ Escrow")] by parties to ihe .Seventh Panial Consent Decree [shall accrue to the benefit of the CD-8 Work DcfendantsJ only to the c.Kieni, it any, ihal EPA has agreed in wniing to credit ihe jCD-S] Work Defendants with such funds." Tlie CD-S Work Defendants will utilize the ••Qll Eighth Panial Consent Decree Escrow Account." "Work" account, under Paragraph XT.X.A. of CD-K ("•Work Trust") regarding the scceipi of such funds.

P r . n u J '•'! !<ii ;rl<<i P-.iptr

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Instead, the Work Defendants to the Third Partial Consent Decree for OH ("the CD-3 Work Defendants" and "CD-3") are currently remediating the Development Parcel under Paragraph Vin.C of the Third Partial Consent Decree for OO ("North Parcel Excluded Work"). The parties to this Letter Agreement agree that integrating the infrastructure requirements for redevelopment of the Development Parcel into the remedial design for the North Parcel Excluded Work would be efficient and cost effective and would facilitate its sale. As set forth below, should the Development Parcel be sold, the proceeds of the sale will become available for allocation and disbursement pursuant to this Letter Agreement.

Pursuant to CD-7, the CD-7 Generator Group established the OH Site Custodial Trust ("Trust"). The Trust is charged by CD-7 with marketing and selling, for the maximum value, any property it receives, such as the Development Parcel. CD-7 requires the Trust to deposit the Net Proceeds^ from any sale of the Development Parcel into the CD-5 Escrow within seven days of receipt. The Trust is currently engaged in discussions with prospective purchasers about the sale of the Development Parcel for construction of a shopping mall under the "alternate conveyance" provisions of CD-7, Paragraph X.B.6.d.

EPA has determined that allocation and disbursement of a portion of the Net Proceeds as provided below will provide a financial incentive to the CD-8 Work Defendants to integrate the Development-Related Work (as defined in footnote 7) into the North Parcel Excluded Work and to encourage an early sale of the Development Parcel. EPA also has concluded that integration of the Development-Related Work into the remedial design and constmction work and the sale of the Development Parcel will provide benefits to the United States in the form of earlier reimbursement of its response costs at the Site and improved oversight of Development-Related Work to ensure that the redevelopment work does not interfere with or hinder or delay implementation of the remedy or impair the remedy's protectiveness.

II. Disbursement of Certain Funds

This Letter Agreement covers two categories of funds: A) monies previously placed in the CD-5 Escrow pursuant to CD-7;'* and B) any Net Proceeds from the sale of the Development Parcel.'

^CD-7 defines "'Net Proceeds" as "the proceeds of any sales . . . [the OH Site (Custodial Trust]... receives . . . net of any reasonable costs (including, but not limited to, any ad valorem or other taxes) incurred by the . . . Trust in connection with the owmership, lease, sale, or other conveyance of tlus [real or personal] property."

^ See, CD-7 Paragraph Xn.A.2.c.(10).

•'The "CD-5 Escrow" is the Cash'Escrow Account established pursuant to the Fifth Partial Consent Decree for On C'CD-5").

'As noted in footnote 1, the CD-8 Work Defendants intend to utilize the Work

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A. Disbursement of Funds Already In the CD-5 Escrow

Subject to the conditions set forth in Section En of this Letter Agreement, EPA will allocate and authorize the disbursement to the Work Trust, collectively, 5900,000 aheady deposited in the CD-5 Escrow pursuant to CD-7.

B. Disbursement of the Net Proceeds from the Sale of the Development Parcel

Subject to the conditions set forth ui Section III of this Letter Agreement, EPA will allocate and authorize the disbursement of any Net Proceeds from the sale of the Development Parcel as follows:

1. First, to reimburse the United States for the following costs, in the following order of priority:

a. An amount equivalent to the amount EPA authorizes to be disbursed from the CD-3 Cash Escrow Account to the CD-3 Work Defendants and other parties for performing the North Parcel Excluded Work and for other North Parcel remedial activities pursuant to CD-3;

b. EPA's "Interim OSN Response Costs;"* subject to EPA providing an itemized cost summary report as required by CD-7, Paragraph XVn.N.2.a.

c. Oversight costs incurred by EPA for the North Parcel Excluded Work subject to EPA providing an itemized cost summary report; and

d. Costs incurred by the United States in connection with CD-7 access issues or "Development-Related Work,"^ and any other costs incurred by the United

Trust regarding the receipt of any funds.

'CD-7, Paragraph Vn.Z, provides: "'Interim OSN Response Costs' shall mean all costs incurred by the United States, including direct and indirect costs, paid in connection with the OSN RA Work between September 30, 1999 and the effective date of this Consent Decree, which shall also include those costs paid in connection with the work conducted under the OU Site Third Partial Consent Decree on the remedy for the North Parcel."

^"Development-Related Work" shall mean all actions related to integrating the development into the design and construction of the remedy selected in the Gas Control and Cover ROD, as amended September 28, 1990 including, but not limited to, the North Parcel Excluded Work. Actions defined as "Development Related Work" include, but are not limited to: (1) design and construction activities necessary to prepare the Site for development; (2) implementation of the cost estimating process set forth in the 'Tinal Work Plan for CD-3 North Parcel Excluded Work" (as amended); (3) grading, retaining

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States in connection with North Parcel remedial activities (whether performed pursuant to CD-3 or CD-7), subject to EPA providing an itemized cost summary report.

2. Second, should any Net Proceeds remain after the United States is fiilly reimbursed for the costs described in Paragraph E.B.l above, payments will be made to the Work Trust, for the following costs, in the following order of priority:

a. An amount equivalent to the costs incurred by the CD-3 Work Defendants, consistent with the National Contingency Plan, m performing the North Parcel Excluded Work prior to EPA's approval of the Excluded Work Conipledon Report, as provided in Paragraph XLII.A.2 of CD-3, excluding those costs otherwise reimbursed to the CD-3 Work Defendants and other parties pursuant to CD-3;*

b. 5207,767.00, representing the amount EPA and the CD-8 Work Defendants have agreed is owed to New Cure, Inc. ("NCF') by Greenfield, The Ezralow Company, LLC or the Eclipse Development Group for Development-Related Work prior to November I, 2002, minus those amounts that are reimbursed directly or indirectly througli payment offsets or otherwise;

c. An amount equivalent to the costs incurred for Development-Related Work after November I, 2002 by the CD-3 Work Defendants, CD-8 Work Defendants, NCI, or by a special purpose entity created by the CD-8 Work Defendants or NCI, that are not reimbursed directly or indirectly through payment offsets or otherwise;

d. The sum of 5428,000, representing an estimate of the net present value of the CD-8 Work Defendants' expenses over twenty-seven (27) years for the operation, maintenance, and monitoring of the North Parcel remedial systems pursuant to CD-8; and

e. 20% of the litigation costs and settlement payments combined, up to 5600,000.00, incunred by the CD-3 Work Defendants, the CD-8 Work Defendants, New Cure, Inc. and the OH Site Custodial Trust in:

walls, protective liners, and piles or other foundation requirements for buildings; and (4) design and construction of the South Parcel access road.

'CD-3, Paragraph VIII.E, provides that if the CD-3 Work Defendants meet die requirements of CD-3, they are entitled to payment from the CD-3 Cash Escrow Account for up to the first $6 million of costs incurred for the North Parcel item of Excluded Work.

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(1) The lawsuit captioned, Greenfield Monterey Park, LLC V. The Ezralow Company. LLC, Los Angeles Superior Court, Northeast District, Case No. GC032925, or any successor thereto concerning the same subject matter; and

(2) The dispute resolution process ordered by the United States District Court for the Central District of Califomia, on or about June 7, 2004, tn the matter captioned United Stales of America v. Operating Industries. Inc., Case No. CCV 00-08794 (Cwx), or other dispute resolution process related thereto concerning the same subject matter.

To qualify as litigation costs for purposes of this Paragraph n.B.2.e, the costs must be incurred, paid and documented as required by Paragraph [n.B.4 below. To qualify as settlement payments for purposes of this Paragraph ll.B.2.e, the payments must be made pursuant to a settlement agreement or a final judgment fully resolving the matters identified in Paragraphs U.B.2.e.l and 2, above, and must be documented as required by Paragraph in.B.4 below.

3. Third, should any Net Proceeds remain after the payments are made pursuant to Paragraphs 11.B.l and 11.B.2 above, to EPA and the Work Trust, as follows:

a. Of the first 58 million of any remaining Net Proceeds, 20% lo EPA (i.e., up to 51.6 million) and 80% to the Work Trust; and

b. Any remaining Net Proceeds in excess of 58 million to the Work Trust,

rn. Conditions

A. The allocation and authorization for disbursement of the 5900,000.00 allocated to the Work Trust pursuant to paragraph II. A of this Letter Agreement is conditioned on the close of the escrow for sale of the Development Parcel on terms approved by EPA pursuant to Paragraph m.B.l and 2. below.

B. The allocation and authorization for disbursement of the flinds allocated to the Work Trust pursuant to paragraph U.B of this Letter Agreement is conditioned on the occurrence of all of the following conditions:

I. EPA's approval pursuant to CD-7 of the terms and conditions of the sale or conveyance of the Development Parcel;'

'CD-7, Paragraph Xll.A.l.f provides: "Neither of the Ofi Site Trusts shall assign.

2. The close of the escrow for sale of the Development Pai-cel on terms approved by EPA pursuant to Paragraph DI.B.l. above;

3. EPA's completion of an accounting and allocation of the fluids in the CD-5 Escrow as provided in CD-8 ("CD-5 Accounting and Allocation");'"

4. For costs described in Paragraph lf(B)(2)(a) - (c) and e of this Letter Agreement:

a. EPA's receipt of written documentation of the expenditures for the costs and the CD-8 Work Defendants' written certification as to the accuracy of such expendittires and costs;

b. EPA's determination that the costs were incurred and documented consistent with the billing practices required for reimbursement of CD-8 Excluded Work.

sell or convey any of the real property it receives . . . unless both of the following requirements are met: (1) the OO Site Trust submits a written report to the EPA describing the terms of the sale, assignment or conveyance and the manner in which those terras meet the requirements of tliis Consent Decree; and (2) the EPA informs the OH Site Trust proposing the sale, assignment or conveyance that it has determined, in its sole discredon, that the terms and conditions of the sale or conveyance will: (i) facilitate, and will not in any way hinder, the performance of all remedial work on that property, and the operation and maintenance of that remedial work, and (ii) will require the grantee to comply with the provisions of Section XVni (Institutional Controls, page 125) to the same extent as the OH Site Trust proposing the sale or conveyance would be required to comply with respect to the property the grantee is to receive."

'°CD-8, Paragraph XIX.S, provides, in relevant part: "EPA currently is preparing an accounting of funds on deposit in the Fifth Decree Escrow as of July 1, 2001, as provided in this Paragraph XIX.S. 1. The [CD-8] Work Defendants shall assist EPA in the preparation of the accounting pursuant to this Paragraph XIX.S, including providing assistance in obtaining the relevant documents and information requested by EPA 4. Following completion of the accounting . . . EPA will determine the appropriate allocation of those fimds between the Cash Escrow and EPA, and will send the accounting and the allocation to the [CD-8] Work Defendants. If the [CD-8] Work Defendants do not initiate a dispute challenging EPA's allocation with thirty (30) days of receipt of the accounting and allocation, EPA shall instruct the escrow agent for the Fifth Decree Escrow to transfer funds to EPA in accordance with the accounting and allocation."

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5. EPA's approval of the Construction Completion Report for the North Parcel Excluded Work, which report must be prepared and subinitted pursuant to Sections 5.5.8 and 7.5.2 of the CD-3 Scope of Work.

C. Within 30 days of satisfaction of the conditions listed above in Paragraph III.A, EPA will authorize the disbursement to the Work Trust ofthe 5900,000 set in forth in Paragraph n.A in accordance with the procedures set forth in the CD-5 Escrow Agreement. Within 60 days of safisfaction ofthe conditions listed above in Paragraph m.B, EPA will authorize the disbursement to the Work Trust ofthe amounts set forth in Paragraph n.B in accordance with the procedures set forth in the CD-5 Escrow Agreement.

rV. Waivers and Releases

A. The CD-8 Work Defendants, collectively and individually, hereby waive and release any right to a claim or claims they or their employees, agents, successors or assigns, may have to reimbursement from the United States for any costs incurred pursuant to CD-7, including Paragraph XII.A.2.c.(10) of CD-7, including any legal fees and/or payments made pursuant to any settlements or judgments, including:

1. The lawsuit captioned, Greenfield Monterey Park, LLC v. 77;e Ezralow Company. LLC, Los Angeles Superior Court, Northeast District, Case No. GC032925, or any successor thereto concerning the same subject matter;

2. The dispute resolution process ordered by the United States District Court for the Central District of Califomia, on or about June 7, 2004, in the matter captioned United States of America v. Operating Industries. Inc., Case No. CCW 00-08794 (Cwx), or any successor thereto concerning the same subject matter; and

3. Other lawsuits or claims filed by Greenfield, The Ezralow Company, LLC, Eclipse Development Group, and their employees, agents, successors or assigns arising from or in relation to the "Option and Transfer Agreement between A.H.A.S., Inc. and Greenfield Monterey Park, L.L.C. doing business as Greenfield Development" attached to CD-7 as Appendix D, including all subsequent amendments and modifications.

B. The CD-8 Work Defendants, collectively and individually, hereby waive and release any right they or their employees, agents, successors or assigns may have, pursuant to CD-8 Paragraph XIX.S.2.(3) or this Letter Agreement, to dispute the allocation ofthe amounts deposited by CD-7 parties to the CD-5 Escrow.

C. The CD-8 Work Defendants, collectively and individually, hereby agree to indemnify the United States against any claim or right the Tmst, the CD-3 Work Defendants, the CD-7 Generator Group and/or their respective group members, employees, agents, successors or assigns, may have:

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1. To reimbursement from the United States for any costs incurred pursuant to CD-7 including any legal fees or payments made pursuant to any settlements or judgments concerning the matters identified in Paragraph FV.A.l - 3, above; and

2. To deduct the costs referenced above in this Paragraph FV.A, as "reasonable costs" or otherwise, prior to depositing the Net Proceeds from the sale ofthe Development Parcel into the CD-5 Escrow pursuant to CD-7, Paragraph Xn.A.2.c.(10).

Except that the indemnification provided in this Paragraph FV.C does not apply to the group members ofthe CD-3 Work Defendants and CD-7 Generator Group who have declared bankruptcy under the laws ofthe United States and, as determined by the United States in its uiueviewable discretion, have provided the United States with a satisfactory waiver and release as part of a bankruptcy settlement with the United States.

V. Dispute Resolution

As noted above, the CD-8 Work Defendants may not dispute pursuant to CD-8, the crediting of CD-7 settlement monies pursuant to CD-8 Paragraph XIX.S.2.(3) or this Letter Agreement. However, the CD-8 Work Defendants, collectively, and EPA may dispute whether the other party has failed to meet a requirement of this Letter Agreement pursuant to the dispute resolution procedures set forth in CD-8.

VI. Limitation of Scope of Agreement

A. The matters addressed in this Letter Agreement concem only the Development Parcel. Issues related to the potential future sale and/or development ofthe North Parcel's "Remediation Parcel" and/or the "South Parcel," as these terms are defined in CD-7, are outside the scope of this Letter Agreement.

B. Nothing in this Letter Agreement Decree shall be construed to create any rights in, or grant any cause of action to, any person not a party to this Letter Agreement. Each ofthe parties to this Letter Agreement expressly reserves any and all rights, defenses, claims, demands, and causes of action which each party may have with respect to any matter, transaction, or occurrence relating in any way to the Site against any person not a party hereto.

Vn. Signatories

The undersigned representative ofthe U.S. EPA Region IX Superfund Division certifies that he is fiilly authorized to enter into the terms and conditions of this Letter Agreement and to execute and legally bind to this Letter Agreement the U.S. EPA Region Di Superfiind Division. The undersigned representative ofthe CD-8 Work Defendants certifies that he is fully authorized to enter into the terms and conditions of this Letter Agreement and to execute and legally bind to this Letter Agreement the CD-8 Work Defendants, collectively and individually, pursuant to the

-9-temis of the Operating hidustries, Inc. Site Steering Committee Agreement of December 31, 1986, as amended, a separate agreement between and among the CD-8 Work Defendants.

Vlil. Term of Agreement: Reservation of Rights

A. Sections I through VI and Section IX of this Letter Agreement will expire and have no effect after December 31, 2009, unless prior to such expiration:

1. The conditions set forth in Paragraphs m.B.l and 2 are satisfied; or

2. If the conditions set forth in Paragraphs m.B. 1 and 2 are not satisfied by December 31, 2009, but the Construction As-Built Report for the North Parcel remedy and integrated Development-Related Work (as this term is defined in footnote 7, above) has been submitted to EPA by December 31, 2008, then this Letter Agreement will not expire until midnight on June 30, 2011.

In addition, EPA and the CD-8 Work Defendants may mutually agree in writing to a later expiration date at any time prior to the expiration of tliis Letter Agreement.

B. If Sections I through VI and Section DC of this Letter Agreement expire pursuant to the preceding Paragraph VIII.A, then: (1) EPA and the CD-8 Work Defendants each will be deemed to have reserved all of their respective rights under CD-8 in relation to the subject matter of this Letter Agreement, if any, and any such rights will be considered preser\'ed; 2) any statutes of limitation or limitations in equity, including but not limited to laches, applicable to such reserved rights will be deemed to have been tolled for the time period between the effective date of this Letter Agreement and the date of its expiration; and (3) any waivers and releases provided to EPA pursuant to Paragraph IV will be null and void as ofthe date of such expiration.

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IX. Notices

Any notices required under this Letter Agreement shall be provided as follows:

As to EPA:

Pankaj Arora EPA Project Coordinator - Oil Siic Superfund Site Cleanup Section 4 (SFD-7-4) U.S. Environmental Protection Agency, Region IX 75 Hawthome Sl. San Francisco. CA 94105

Eric A. Esler Assistant Regional Counsel - OII Site Office of Regional Counsel (ORC-3) U.S. Environmental Protection Agency, Region IX 75 Hawthome Sl. San Francisco. CA 94105

As to the CD-8 Work Defendants:

Maiy Esper, President New Cure. Inc. 2550 Greenwood Avenue Monterey Park. CA 91755

David Hirsch. Chairman. Oil Steering Committee c/o New'Cure, Inc. 2550 Greenwood Avenue Monterey Park. CA 91755

David A. Giannotti, Esq. Offices of David A. Giannotti Watt Plaza 1925 Century Park East, Suite 950 Los Angeles. CA 90067

EPA and ihe CD-8 Work Defendants may change cheir respective designated notice recipienls or ihe recipients" contact information at any time by written notice.

X. Effective Date: Counterparts

This Letter Agreement shall be effective as of the date of the last signature and may be executed by the parties in multiple counterparts, each of which shall be deemed an original and all of which shall constitute the same document.

Sincerely.

Keith A. Takala Director, U.S. EPA Region DC Superfund Division

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Reviewed and Accepted on Behalf of the CD-8 Work Defendants:

lATGiauii David A. Giarinolti Counsel for the CD-8 Work Defendants

cc: CD-8 Work Defendant Group Members Mary Esper, President, New Cure, Inc. David Hirsch, Chairman-OII Steering Committee and Trustee-Oll Site Custodial Trust

EXHIBIT 12

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thirty (30) Days of the entry of this Consent Decree, EPA shall

send instructions to the Work Defendants for payment of these

amounts from the Cash Escrow Account to EPA. Any payments

received by EPA pursuant to this Subparagraph XVIII.B.3 shall not

be credited to the Work Defendants for purposes of the Work

Defendants' funding limitations for Future Response Costs nor the

Work Defendants' payment of the United States' Past, Interim or

Future Response Costs.

C. United States' Interim Response Costs

Within thirty 130) Days of notice of entry of this Consent

Decree, the Work Defendants shall pay into the EPA Hazardous

Substance Superfund the amount of $2,000,000 (two million

dollars) toward the United States' Interim Response Costs. Work

Defendants shall make this payment pursuant to Paragraph X.V 111. K

15 i (page 25.) of this Section.

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D. State Past Response Costs

1. The Work Defendants agree to reimburse the State

and the State Accounts for certain past response costs that have

been incurred by the State in responding to conditions at the OII

Site.

2. The State will provide the Work Defendants with an

accounting summary of its unreimbursed costs for the period up to

and including the date of lodging of this Consent Decree. The

Work Defendants shall pay these costs by certified check within

thirty (30) Days of receipt of the accounting summary. The check

shall be made payable to the California Department of Toxic

Substances Control and shall reference the "Operating Industries

Superfund Site.' The Work Defendants shall forward the certified

OII CD-8 - 83 -

1 I check to:

California Department of Toxic Substances Control Attn: Accounting/Cashier

3 1 P.O. Box 806 Sacramento, CA 95812-0806

5 ( 3. A copy of the transmittal letter and a copy of the

5 I check shall be sent to the State Project Coordinator, as provided

7 [by Section XXXyii; (Form of Notice, page 2 2.) and to the

California Attorney General at the address shown on the cover

page of this Consent Decree.

E. United gtatgs' P^gt n(a Futjvf? Respong^. C99tg

Within thirty (30) Days of notice of entry of this Consent

Decree, the Work Defendants shall pay into the OII Special

13 I Account within the EPA Hazardous Substance Superfund the amount

14 [of $10,225,000 (ten million two hundred twenty-five thousand

ISttdollars) toward the United States' Past Response Costs and/or

16 I Future Response Costs or other response costs for the OII Site,

17 I as determined by EPA. This payment is in addition to the

18 I payments to be made pursuant to Paragraphs XVIII .A. XVIII.C and

19 I XVIII .G of this Section. The Work Defendants shall make this

20 [payment from the escrow account established pursuant to the

21 Fourth Decree. The Work Defendants shall make this payment

22 pursuant to Paragraph XVIII.K Of this Section.

23 F, Payment bv the Settling Federal Aaengv

24 1. As soon as reasonably practicable after the

25 effective date of this Consent Decree, and consistent with

26 [subparagraph XVIII.F.2, the United States, on behalf of the

27 I Settling Federal Agency, shall pay to the Oil Special Account

28 jwithin the EPA Hazardous Superfund the amount of $1,083,131 (one

[oil CD-8 - 84 -

1 I million eighty-three thousand one hundred thirty-one dollars), in

2 I reimbursement of Past Response Costs, Interim Response Costs, and

3 J Future Response Costs, which payment includes a premium payment

4 [for Future Response Costs,

si 2. If the payment to the OII Special Account required

6 jby the preceding Subparagraph XVIII.F.1 is not made as soon as

7 I reasonably practicable, the appropriate EPA Regional Branch Chief

SBmay raise any issues relating to payment to the appropriate DOJ

9!Assistant Section Chief for the Enviror„T\ental Defense Section.

0 I In any event, if this payment is not made within one hundred

1 II twenty (120) Days after the effective date of this Consent

2 BDecree, EPA and DOJ have agreed to resolve the issue within

1 II thirty (30) Days in accordance with a letter agreement dated

December 28, 1998.

3. A copy of the transmittal letter and a copy a t the

confirmation of payment shall be sent to the State Project

Coordinator, as provided by Section KXXVII (Form of Notice, page

201) .

4. 'In the event that payments reauired by

Subparagraph XVIII. F. 1 are not ir.ade within thirty (30) Days of

notice of entry of this Consent Decree, Interest on the unpaid

balance shall be paid at the rate established pursuant to Section

107(a) of CERCLA, 42 U.S.C. § 9607(a), commencing on the

effective date of this Consent Decree and accruing through the

date of the payment.

5. The Parties to this Consent Decree recognize and

acknowledge that the payment obligations of the Settling Federal

Agency under this Consent Decree can only be paid from.

Oil CD-8 - B5

appropriated funds legally available for such purpose. Nothing

in this Consent Decree shall be interpreted or construed as a

commitment or requirement that the Settling Federal Agency

[obligate or pay funds in contravention of the Anti-Deficiency

slAct, 31 U.S.C. § 1341, or any other applicable provision of law.

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G. Payment of United States' Future Response

Cosi;s by WQrk DQ^gn(jant^

1. This Paragraph governs the reimbursement of Future

Response Costs by Work Defendants. Subject to the limitations in

Subparagraph XVIII.0.5, the Work Defendants shall reimburse the

United States for Future Response Costs as follows: Work

Defendants shall pay Future Response Costs that consist of the

United States' Work Oversight Costs pursuant to Subparagraph

XVIII .G. 2 below; VIoik Defendants shall pay Future Response Costs

that consist of the United States's Excluded Work Oversight Costs

pursuant to. Subparagraph XVIII.G.3 below; and Work Defendants

shall pay all other Future Response Costs pursuant to

Subparagraph XVIII.G.4 below. EPA will provide the Work

Defendants with a copy' of the EPA Itemized Cost Summary Report

(or successor report that contains a like level of detail)

("Report") that provides an accounting of such costs being

billed. If the Work Defendants make a written request within

thirty (30) Days of receiving the Report, EPA will also provide

the documentation that EPA lists in the Report and/or

documentation provided to EPA by the USAGE (or other federal

agency billing costs through EPA's Report) in its cost

documentation package as required by the Interagency Agreement

between EPA and USACE (or other agency). EPA will work with the

OII CD-8 86 -

llAdjusted $500,000 (five hundred thousand dollars), then the Work

2 8Defendants shall pay an Inflation Adjusted $500,000 (five hundred

thousand dollars), and the Rollover Account shall be reduced by

4 I the difference between the Inflation Adjusted $5OO,CI0O (five

5 I hundred thousand dollars) and the Work Oversight Costs. The Work

6 I Defendants shall pay these costs pursuant to Paragraph XVIII.K of

7 I this Section, within thirty (30) Days of receipt of the cost

summary.

9B 3. Payment o t Excluded Work Oversight Costs. If at

•0 J the request of EPA, the Work Defendants perform an item or

'1 [portion of an item of Excluded Work, the Work Defendants shall

•2 8 pay EPA and the State the Excluded Work Oversight Costs

'3 [associated with that item or portion of an item of Excluded Work

4 I to the extent the Excluded Work Oversight Costs associated with

' 5 I that Excluded Work plus the Excluded Work disbursement made (or

.6 I to be made) pursuant to Paragraph XX.C (page lOg) of Section XX

7 I (Disbursement of OII Special Account Funds) is greater than one

.8 [hundred eight point seven percent (108.7%) of the amount

9 I specified in Subparagraphs XX.C.l (page 109) and XX.C.2 (page

'0 [ 1101 of Section X3i (Disbursement of OII Special Account Funds),

1 [ aa modified by Paragraph XX.B of that Section 5iX. The payment

2 [obligation of this Subparagraph XVIII.G.3 is not subject to the

'3 [limitations contained in Subparagraph XVIII.G.2.

•-J j 4. Payment of Other Future Response Costs. The Work

'5 jDefendants shall reimburse the United States for all United

'6 [states' Future Response Costs other than the Work Oversight Costs

7 I and the Excluded Work Oversight Costs. The limitations contained

'8 j in Subparagraphs XVIII.G.2 (page gl) and XVIII.G.3 (page 91) of

JOII CD-8 - 91 -

1 this Section do not apply to payment of such costs.

2 5. Notwithstanding Subparagraphs XVIII.G.2 (page §2),

3 XVI11.G.3 (page £1), and XVIII.G.4 (page 91) above, the Work

4 Defendants shall not be obligated to reimburse the United States

5 for (1) Future Response Costs incurred after the date of lodging

6 of this Consent Decree for issuance or enforcement of unilateral

7 administrative orders to, or pursuit of a cost recovery action by

8 the United States against, any party that is not a Party to this

9 Consent Decree, or (2) payments made by the United States to the

10 I Work Defendants pursuant to Section JQi (Disbursement of OII

11 Special Account Funds, page 108)• except as provided in Paragraph

12 XX. I (page H i ) of that Section.

13 I H. State's Future Response Costs

14 . 1. The Work Defendants shall reimburse the State, the

15 State Accounts, and any successors to those accounts, for the

16 Future Response Costs incurred by them under this Consent Decree.

17 I In addition, and without limiting the foregoing, the Work

18 [Defendants will reimburse the State for up to $50,000 (fifty

19 thousand dollars) incurred by the State in overseeing the

20 I Excluded Work (as defined in this Consent Decree) that is

21 performed by parties other than the Work Defendants. The State

22 will provide the Work Defendants with an accounting of its costs.

23 These response costs shall be paid by certified check within

24 thirty (30) Days of receipt of the accounting documentation. The

25 State will bill for such costs on a periodic basis, no more

26 frequently than annually. Nothing in this Paragraph shall affect

27 [ the State's right to reimbursement of its response costs from any

28 Bother person not a signatory to thia Consent Decree.

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thirty (30) Days of the entry of this Consent Decree, EPA shall

authorize the payment. These funds represent payment of the

amounts specified in Paragraphs/Subparagraphs XVIII.A.4. XVIII.C

and XVIII. R. 2. h (pages £1, H and M ) of Section XVIII (Payment

of Response Costs) .

R. Upon entry of this Consent Decree, Work Defendants

shall submit to EPA a written request for payment from the cash

escrow account established pursuant to the Fourth Decree to EPA

in the amount of $10,225,000 (ten million two hundred twenty-five

thousand dollars). Within thirty (30) Days of the entry of this

Consent Decree, EPA shall authorize the payment. These funds

represent payment of the amount specified in Paragraph-XVIII.E

(page M ) of Section XVIII (Payment of Response Costs) .

S. EPA currently is preparing an accounting of funds on

deposit in the Fifth Decree Escrow as of July 1, 2001, as

provided in this Paragraph XIX.S.

1. The Work Defendants shall assist EPA in the

preparation of the accounting pursuant to this Paragraph XIX.S,

including providing assistance in obtaining the relevant

documents and information requested by EPA.

2. The following amounts shall accrue to the benefit

of the Work Defendants; (1) the sum of $6,500,000 (six million

five hundred thousand dollars), from the funds on deposit as of

February 1, 1998; (2) the amounts deposited to the Fifth Decree

Escrow between February 1, 1998 and June 30, 2001, pursuant to

administrative settlements with de minimis parties each,

attributed with a volume of waste less than 110,000 gallons; and

(3) the amounts deposited by parties to the Seventh Decree only

Oil CD-8 - 107 -

to the extent, if any, that EPA has agreed in writing to credit

the Work Defendants with such funds.

3 3. Except as provided in the preceding Subparagraph

4 XIX.S.2, all funds in the Fifth Decree Escrow shall accrue to the

5 benefit of EPA.

6 4. Following completion of the accounting pursuant to

7 this Paragraph XIX.S, EPA will determine the appropriate

8 allocation of those funds between the Cash Escrow and EPA, and

9[will send the accounting and the allocation to the Work

10 1 Defendants. If the Work Defendants do not initiate a dispute

11 [challenging EPA's allocation with thirty (30) days of receipt of

12 I the accounting and allocation, EPA shall instruct the escrow

13 [agent for the Fifth Decree Escrow to transfer funds to EPA in

"• " ' accordance with the accounting and allocation.

5. Any payments received by EPA pursuant to this

Paragraph XIX.S shall not be credited to the Work Defendants for

purposes of the Work Defendants' funding limitations for Future

Response Costs nor the Work Defendants' payment of the United

19 [states' Past, Interim >or Future Response Costs.

" l I XX. Dlsbursemsnt of OII Special Account

Funda

A. EPA shall disburse funds from the OII Special Account

/;« to the Work Defendants if they perform Excluded Work, in

25 accordance with the procedures and milestones for phased

26 disbursement set forth in this Section IQC (Disbursement of OII

27 I Special Account Funds). The procedures in this Section also

28 I shall apply to disbursements to the Work Defendants from funds

[oil CD-8 - 108 -

1 available to EPA for such expenses in an OII escrow account

2 I(whether established pursuant to the Third Decree, this Consent

3 Decree or a future OII settlement), in which case references in

4 this Section to "OII Special Account" shall be read as referring

5 to such escrow account.

6 B. In the event the Work Defendants perform any or all

7 item(s) of the Excluded Work or any portion thereof pursuant to

8 EPA authorization, the Work Defendants shall be entitled to

9 disbursement from the OII Special Account under this Section XX

!0 (Disbursement of OII Special Account Funds), for costs incurred

•1 and paid'by the Work Defendants for each such item of the

2 Excluded Work, up to the amounts specified in Paragraph XX.C of

3 this Section XX. The value toward completion of any work that:

4 [JPA determines has been satisfactorily performed, or funds

5 [provided, by Plaintiffs, by EPA, or by any person not a signatory

6 I to this Consent Decree for each item of the Excluded Work shall

7 I correspondingly reduce the disbursement owing from the OII

S I Special Account to the Work Defendants for that item of the

9 I Excluded Work.

0 C. The disbursement that EPA shall make to the 'Work

1 Defendants shall occur after achievement of the following

2 milestones and for each item of the Excluded Work shall not

3 exceed the amounts specified in the following Subparagraphs

4 XX.C.l through XX.C.2.

1. For the groundwater monitoring item of the

Excluded Work as defined in Subparagraph VIII.A.1 (page 52) of I

1 I Section VIII (Excluded Work), reimbursement shall not exceed the

3 I lesser of (i) $488,750 (four hundred eighty-eight thousand seven

Oil CD-8 109

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llhundred fifty dollars) per six months, and (ii) $531,250 (five

2 [hundred thirty-one thousand two hundred fifty dollars) per six

3 [months reduced by the Excluded Work Oversight Costs associated

4 [with that item of the Excluded Work for that six months.

5 [Milestone: Completion by the Work Defendants of six months of

6 [activities for this item of the Excluded Work or, for the final

7 II six months of this Excluded Work item, completion of the

groundwater monitoring Excluded Work activities and EPA approval

of the Excluded Work Completion Report for this item. In

addition, the aggregate disbursements to be made by EPA to the

Work Defendants for the groundwater monitoring item of the

Excluded Work shall not exceed the lesser of (i) $5,865,000 (five

million eight hundred sixty-five thousand dollars) or (ii)

$6,375,000 (six million three hundred seventy-five thousand

dollars, reduced by the Excluded Work Oversight Costs associated

with the groundwater monitoring item of Excluded Work.

2. For the Site Access and Security item of the

Excluded Work as defined in Subparagraph VIII.A.2 (page 12) of

Section VIII.A.2 (Excluded Work), reimbursement shall not exceed

the lesser of (i) $253,000 (two hundred fifty-three thousand

dollars) per six months, and (ii) $275,000 (two hundred seventy-

five thousand dollars) per six months reduced by the Excluded

Work Oversight Costs associated with that item of the Excluded

Work for that six months. Milestone: Completion by the Work

Defendants of six months of activities for this item of the

Excluded Work or, for the final six months of this Excluded Work

item, completion of the Site Access and Security Excluded Work

activities and EPA approval of the Excluded Work Completion

OII CD-8 - 110 -

•9;^^MMl

1 Report for' this item. In addition, the aggregate disbursements

2 to be made by EPA to the Work Defendants for the Site Access and

3 Security item of the Excluded Work shall not e.xceed the lesser of

4 ' (i) $3,542,000 (three million five hundred forty-two thousand

5 dollars) or (ii) $3,650,000 (three million eight hundred fifty

6 thousand dollars) reduced by the Excluded Work Oversight Costs

7 associated with the Site Access and Security item of Excluded

8 Work.

9 D. The amounts set forth in Paragraph XX.C above also

10 represent the maximum amount that the United States or the State,

11 or their contractors, shall incur for performance of the listed

12 Excluded Work items. As provided in Subparagraph XVIII. I .2 (page

13 £2) of Section XVIII (Reimbursement of Response Costs), should

14 I the United States, the State, or their contractors, incur

15 [expenses in excess of the amounts set forth in Paragraph XX.C in

16 [performing any item of the Excluded Work, the Work Defendants

17 [ shall reimburse such expenses.

18 i E. Requests for Disbursement of Special Account Funds

19 Within sixty (60) Days of attainment of a milestone of the

20 Excluded Work, as defined in Paragraph XX.C, the Work Defendants

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shall submit to EPA a Cost Summary and Certification, as defined

in Subparagraph XX.E.1 below, covering the Excluded Work

performed pursuant to this Consent Decree up to the date of

completion of that milestone. The Work Defendants shall not

include in any submission costs included in a previous Cost

Summary and Certification following completion of an earlier

milestone of the Excluded VJork if those costs have been

previously disbursed pursuant to Paragraph XX.G below.

OII cD-a - 111 -

1. Each Cost Summary and Certification shall include

a complete and accurate written cost summary and certification of

the necessary costs incurred and paid by the Work Defendants for

the Excluded Work covered by the particular submission, excluding

costs not eligible for disbursement under Paragraph XX.F. Each

Cost Summary and Certification shall contain the following

statement signed by a Work Defendant's designated financial agent

acceptable to EPA, or an Independent Certified Public Accountant:

To the best of my knowledge, after thorough

investigation and review of the Work Defendants'

documentation of costs incurred and paid for Excluded

Work performed pursuant to this Consent Decree [insert,

as appropriate, "up to the date of completion of

milestone 1,' "between the date of completion of

milestone 1 and the date of completion of milestone 2,"

"for the preceding six (6) months," etc.] I certify

that the information contained in or accompanying this

submittal is true, accurate, and complete.

The Work Defendants and their representatives acknowledge that

there are significant penalties for knowingly submitting false

21 information, including the possibility of fine and imprisonment.

22 The Work Defendants' designated financial agent or Independent

23 Certified Public Accountant shall also provide EPA a list of the

2 4 documents that he or she reviewed in support of the Cost Summary

25 and Certification. Upon request by EPA, the Work Defendants

26 shall submit to EPA any additional information that EPA deems

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necessary for its review and approval of a Cost Summary and

Certification.

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1| 2. If EPA finds that a Cost Summary and Certification

2 includes a mathematical accounting error, costs excluded under

3 Paragraph XX,F, costs that are inadequately documented, or costs

4 submitted in a prior Cost Summary and Certification, it will

5 notify the Work Defendants and provide an opportunity to cure the

6 deficiency by submitting a revised Cost Summary and

7 Certification. If the Work Defendants fail to cure the

deficiency within forty-five (45) Days after being notified of

9 the deficiency and of the opportunity to cure it, EPA will

10 recalculate the Work Defendants' costs eligible for disbursement

11 for that submission and disburse the corrected amount to the Work

12 Defendants in accordance with the procedures in Paragraph XX.G of

13 this Section 106. The Work Defendants may dispute EPA's

14 recalculation under this Subparagraph pursuant to Section XXV

15 (Dispute Resolution, page 128). In no event shall the Work

16 Defendants be disbursed funds from the OII Special Account in

17 excess of amounts properly documented in a Cost Summary and

18 Certification accepted or modified by EPA in accordance with the

19 resolution of the dispute.

20 F. Costs Excluded from Disbursement

21 The following costs are excluded from, and shall not be

22 sought by the Work Defendants for, disbursement from the OII

23 Special Account: (1) response josts paid to EPA; (2) any other

24 payments made by the Work Defendants to the State or the United

25 States pursuant to this Consent Decree or due to noncompliance

26 with this Consent Decree, including, but not limited to, any

27 fines, interest or penalties paid pursuant to Section XXVI

28 (Stipulated Penalties, page 141) or pursuant to any federal or

OII CD-8 - 113 -

1 I State laws; (3) attorneys' fees and costs, except for reasonable

2 I attorneys' fees and coats necessarily related to performance of

3 the Excluded Work, such aa obtaining access or institutional

4 controls; (4) costs of any response activities the Work

5 Defendants perform that are not required under, or approved by

6 EPA pursuant to, the provisions of this Consent Decree related to

7 the Excluded Work; (5) costs related to the Work Defendants'

8 litigation, settlement, or development of claims or defenses,

9 including, but not limited to, those for contribution claims,

10 j identification of defendants, personal injury, property damage,

11 or other third party claims; (6) internal costs of the Work

12 Defendants or the OII Steering Committee, including but not

13 limited to, salaries, travel, or in-kind services, except for

' • those costs that represent the work of employees or consultants

of the Work Defendants or of the Oil Steering Committee directly

performing the Excluded Work; (7) any costs incurred by the Work

Defendants prior to the effective date of this Consent Decree;

(8) any costs incurred by the Work Defendants in judicial

resolution of any disputes pursuant to Section XXV (Dispute

[Resolution, page 12g). unless the Work Defendants prevail in the

judicial resolution of the dispute; or (9) any costs that the

22 [work Defendants would have incurred or paid under the provisions

23 I of this Consent Decree even had they not performed Excluded Work.

24 [Nothing in this Paragraph shall preclude the Work Defendants from

25 asserting that such costs and expenditures, excluding fines or

26 penalties, are response costs under CERCLA and the NCP.

27 G. Within sixty (60) Days of EPA's receipt of a Cost

28 Summary and Certification meeting the requirements of

OII CD-8 - 114 -

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1 Subparagraph XX.E.1 above, or if EPA has requested additional

2 [information under Subparagraph XX.E.1 or a revised Cost Summary

3 and Certification under Subparagraph XX.E.2 , within sixty (60)

4 'Days of receipt of the additional information or revised Cost

5 Summary and Certification, and subject to the conditions set

6 forth in this Section and Section VIII (Excluded Work, page 51),

7 EPA shall disburse funds from the OII Special Account to the Work

8 Defendants. Such disbursements shall be made at the completion

9 iof the milestones set forth in Paragraph XX.C above and shall not

10 exceed the amounts set forth in Paragraph XX.C above. EPA shall

11 disburse the funds from the OII Special Account to the payee

12 [designated by the Work Defendants.

13 H. Termination of Disbursements from the Special Account

14 1. EPA's obligation to disburse funds from the OII

15 Special Account under this Consent Decree shall terminate upon

16 EPA's determination that the Work IJefendants: (1) have knowingly

17 submitted a materially false or misleading Cost Summary and

18 Certification; or (2) have submitted a materially inaccurate or

19 incomplete Cost Summary and Certification, and have failed to

20 correct the materially inaccurate or incomplete Cost Summary and

21 Certification within ninety (90) Days after being notified of,

22 and given the opportunity to cure, the deficiency.

23 j 2. EPA's obligation to disburse funds from the OII

24 Special Account under this Consent Decree shall also terminate as

25 to a specific item of the Excluded Work as detailed in

26 Subparagraphs XX.C.l through XX.C.2 above, upon EPA's

27 ! determination that the Work Defendants failed to submit a Cost

28 Summary and Certification as required by Paragraph XX.E within

OII CD-8 - lis -

1 one hundred twenty (120) Days (or such longer period as to which

2 EPA agrees) after being notified that EPA intends to terminate

3 its obligation to make disbursements pursuant to this Section

4 because of the Work Defendants' failure to submit the Cost

5 Summary and Certification as required by Paragraph XX.E: however,

6 if the Work Defendants later submit the missing Cost Summary and

7 Certification, and the Cost Summary and Certification otherwise

meets the requirements of this Section, then EPA may, in its

discretion, disburse funds to the Work Defendants for costs

reflected in that Cost Summary and Certification. Such

11 I disbursement shall not revive the obligation of EPA to disburse

12 [funds for later expenses incurred by the Work Defendants.

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3. EPA's Obligation to disburse funds from the OII

Special Account shall also terminate as to a specific item of the

Excluded Work as detailed in Subparagraphs XX.C.1 (page 109) and

XX.C.2 (page 110) above, upon EPA's assumption of performance

from the Work Defendants of that specific item of the Excluded

Work pursuant to Paragraph XXXIV.E (page 161) in Section XXXIV

(Reservations of Rights), when such assumption of performance of

that specific item of the Excluded Work is not challenged by the

Work Defendants or, if challenged, ia upheld under Section XXV

(Dispute Resolution, page P 28) .

4. The Work Defendants may dispute EPA's termination

of special account disbursements under Section xxy (Dispute

Resolution, page 128>.

I. Recapture of Special Account nigbursemeptg

Upon termination of disbursements from the OII Special

Account under Paragraph XX.H. if EPA has previously disbursed

OII CD-8 116

funds from the OII Special Account for activities specifically

2 related to the reason for termination (e.g., discovery of a

3 I materially false or misleading submission after disbursement of

4 funds based on that submission), EPA shall submit a bill to the

5 Work Defendants for those amounts already disbursed from the OII

6 Special Account specifically related to the reason for

7 termination, plus Interest on that amount covering the period

8 from the date of disbursement of the funds by EPA to the date of

9 [repayment of the funds by the Work Defendants. Within thirty

10 (30) Days of receipt of EPA's bill, the Work Defendants shall

11 reimburse the EPA Hazardous Substance Superfund for the total

12 amount billed, pursuant to Paragraph XVIII. K (page £5.) of this

13 Consent Decree. The Work Defendants may dispute EPA's

14 determination as to recapture of funds pursuant to Section XXV

15 (Dispute Resolution, page 128).

16 J. Use of Special Account Funds

17 I Funds held or deposited in the OII Special Account or the

18 Oil Work Oversight Special Account shall be retained and used to

19 I conduct or finance response actions at or in connection with the

20 iSite, including payment of direct and indirect costs, or shall be

21 transferred by EPA to the EPA Hazardous Substance Superfund.

22 After EPA determines that all or any portion of the funds in the

23 Special Account will not be needed to perform or pay for Excluded

24 [work pursuant to this Consent Decree, and will not be needed to

JSlmake disbursement(s), if any, to the Work Defendants in

36 iaccordance with this Section, EPA may transfer such funds

!7 |( remaining in the OII Special Account to the EPA Hazardous

I Substance Superfund. Neither any such transfer of funds nor any

OII CD-8 - 117 -

1 [ EPA determination(s) under t h i s Paragraph on which such t r a n s f e r

2 i s based sha l l be subject to chal lenge by the Work Defendants

3 [pursuant to the dispute reso lu t ion p rov i s ions of t h i s Consent

4 [ Decree or in any other forum.

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XXI. DlaburBamenCa from the State Slte-

Speclflc Sub-Account

Funds in the State Site-specific Sub-Account shall be

disbursed as follows:

A. Reimbursement of Work Defendants' Costs Not Exceeding

$200.000 (Two Hundred Thousand Dollars).

At any time following ninety (90) days after entry of this

Consent Decree, Work Defendants may seek reimbursement from the

State Site-Specific Sub-Account of no more than $200,000 (two

hundred, thousand dollars) in costs that they incur in

implementing the Work pursuant to this Consent Decree.

B. Remaining Funds

The remaining funds in the State Site-Specific Sub-Account,

including any interest thereon, shall be maintained in that sub

account for use at DTSC's discretion to pay for Site related

response and/or oversight costs, in the amounts and at the times

determined by DTSC. Upon termination of this Consent Decree

pursuant to Section LII (Terrmination and Satisfaction, page 216) ,

DTSC shall disburse any funds that remain in the State Site-

Specific Sub-Account in the following order of priority: (1)

First, to the State to reimburse any unreimbursed response costs

that it has incurred with respect to the Site, whether or not

pursuant to this Consent Decree; (2) Second, to the Work

OII CD-8 - 118 -

Documents

SIS^ *° ''^ Hawthorne Street Director, SuperfUnd Division ... · 75 Hawthorne Street San Francisco, CA 94105 Re: United States Environmental Protection Agency's Statement of Position